After-Market Performance - Explained
What is After-Market Performance?
Written by Jason Gordon
Updated at April 17th, 2022
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Table of Contents
What is After-Market Performance?How Does After-Market Performance Work?Share Price Can Be Volatile After An IPOAcademics Research on After-Market PerformanceWhat is After-Market Performance?
After-market performance refers to the performance of a newly issued stock in terms of price after its initial public offering (IPO). This term measures the variation of a stock price during a period after an IPO. After-market performance of IPOs can start the day after the newly issued shares trades publicly. The measurement of after-market performance helps investors and analysts determine the extent to which the newly issued shares of a company are desired in the marketplace.
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How Does After-Market Performance Work?
The after-market performance of newly issued stocks is not only important to investors and analysts but also of essence to the issuing company and its employees. The performance of such stocks affects the overall performance of a company whether positively or negatively. For instance, a high after-market performance of new stocks can help a company have a higher valuation in the market which offers many benefits to the company.
Share Price Can Be Volatile After An IPO
The after-market performance of newly issued shares after an IPO is determined by the variation in the price of the stock. Price volatility can occur after an IPO given certain circumstances and this might negatively affect the after-market performance of the stock. For instance, if a company goes public through a hot IPO, price volatility can occur after a spike in trade and an increase in orders has first been experienced.