The trick in pricing an initial public offering is that if you set the price too high, potential investors will be turned off. Underprice an offering, and you leave money on the table.
Franchise giant Re/Max ended up pricing its shares at $22 this week, up from an initial estimate of $19 to $21. In three days of trading on the New York Stock Exchange, the company saw bullish investors drive up its share price by 44 percent. “RMAX” closed today at $31.65.
Only time will tell if bullish investor sentiment about Re/Max — which also reflects overall optimism about the state of the housing recovery itself — will prove to be justified. But it’s hard to imagine Re/Max executives or any of the shareholders who were able to secure shares at the IPO price have any regrets. Source: finance.yahoo.com.