Wednesday, July 24, 2013

Stabilizing action on Airasia X

I have been looking at the stabilizing action as made on Airasia X's stock price. Stabilizing action or green shoe option has been made on the shares for almost everyday since its listing date. Stocks have been purchased at RM1.25 for it not to drop below the IPO listed price.

Airasia X's stock is not that bad, but it is not just worth the price it is listed for. I do not know how much it is worth, BUT I AM WONDERING WHY NOT LET THE MARKET DECIDE.

A stabilizing action can actually causes fear among the shareholders as the share price is deemed as not true worth of what its underlying value is - hence probably more selling.

And in the future, for any IPO per se, let's not overprice the initial offer. The recent large IPOs, we have seen the shareholders have sort of become greedy and think that their share price can do wonders.

IPOs (which are sort of new kids on the block) should not do wonders as they have yet to prove their performance consistencies in the market. If the company is beautiful, overtime its stocks price and financial performance would show. But to expect immediate results from selling expensive is not the way.

3 comments:

TJ Wong said...

I agree 100%.
Let the market decide.

Gark said...

You have to understand why the owners do an IPO in the first place, they intend to cash out their investment.It makes no sense that they will want to sell at an attractive price and then wait for the share price to go up as their minority block is sold and gone.

Most of them intent to hold on to long term to their remaining majority block of shares, so why not sell the minority at a premium?

Most IPO is overpriced anyway, so as a rule I do not really subscribe for any IPO's.

lcchong said...

IPO also got no basis for technical analysis. make it even harder to invest/trade.