IPO Allocation: What's Your Real Expected Return?
Buying into an IPO before it trades is appealing since you're hoping to catch a first-day pop. But for retail investors, getting shares isn't guaranteed like a market order. Underwriters control most allocation, and while some brokerages let you request shares, only a fraction of your order typically gets filled, especially for hot deals. The buzz around a stock's expected gain and what you actually pocket can be very different numbers.
This calculator takes your investment amount, IPO price, expected allocation rate, and first-day price change to estimate shares received, dollar amount allocated, expected profit, and return on the amount requested. Real allocation and price moves depend on demand, and many IPOs trade below offer price on day one, so model both conservatively.
Frequently Asked Questions
Underwriters control most allocation; some brokerages let you request shares, but only part of your order is typically filled.
Hot IPOs often fill only a small fraction of requests, while less popular deals can fill close to 100%.
No, many trade below their offer price, so model the first-day change conservatively.