Written By
Paul Tracy
Updated November 4, 2020

What is a Hot IPO?

A hot IPO is an IPO for which there is great demand.

How Does a Hot IPO Work?

For example, let's say Company XYZ invents a cure for cancer and patents the invention. The company can change the world and make its owners fabulously wealthy, so investors are drooling over the company's upcoming $900 million IPO. They are calling every broker trying to get their hands on some shares. This is a hot IPO.

Why Does a Hot IPO Matter?

Hot IPOs get a lot of anticipatory press, a lot of interest from investors, and a lot of media coverage. They also tend to "explode" on their first day of trading and can influence the rest of the market.

It is important to note, however, that plenty of hot IPOs have become poorly performing stocks.

Activate your free account to unlock our most valuable savings and money-making tips
  • 100% FREE
  • Exclusive money-making tips before we post them to the live site
  • Weekly insights and analysis from our financial experts
  • Free Report - 25 Ways to Save Hundreds on Your Monthly Expenses
  • Free Report - Eliminate Credit Card Debt with these 10 Simple Tricks
Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Hot IPO.
Be the first to ask a question

If you have a question about Hot IPO, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

If you have a question about Hot IPO, then please ask Paul.

Ask a question Read more from Paul
Paul Tracy - profile
Ask an Expert about Hot IPO

By submitting this form you agree with our Privacy Policy

Don't Know a Financial Term?
Search our library of 4,000+ terms