Stabilizing Bid
A practice used by underwriters to stabilize the secondary market price of a security after an initial public offering (IPO). The bid is made on behalf of the IPO's underwriters to repurchase shares at the offer price. Investopedia Says:
Stabilizing bids are one of many methods used by underwriters to support the price of the IPO. Stabilizing bids may be used to support a stock that has high selling pressure from investors looking to "flip" their purchased shares for a quick profit. Any attempt to use a stabilizing bid by an underwriter must be made known to the regulatory body of the market. Related Terms:
Bid
Initial Public Offering - IPO
Primary Market
Public Offering Price - POP
Seasoned Security
Secondary Market
Securities And Exchange Commission - SEC
Underwriter
Underwriting |