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IPO price range

The preliminary price band published before an IPO, used to gather demand; it can be raised, cut, or priced outside entirely.

The range is a marketing device set deliberately conservative so the deal has somewhere to go. Where a deal prices relative to its original range is a clean read on demand: above the range means the book was heavily covered, below means the bank had to concede price to fill it.

Multiply the midpoint by the post-offering share count, not the pre-offering count, to get the valuation being marketed.

Example: a range of $24 to $27 on 210M post-deal shares implies $5.04B to $5.67B. Pricing at $30 implies $6.3B, 17% above the midpoint, and signals the book was several times covered.

Related: ipo, book-building, s-1-registration, ipo-pop, underwriter

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

A range beside a trendOne chart swinging between a flat floor and ceiling, another stepping upwards inside a pair of sloping lines.Range-boundresistancesupportprice bounces between two levelsTrendingthe trend channelhigher highs and higher lowsA range has two flat edges; a trend has two sloping ones.
Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.

Educational only, not advice. Spotted an error? Post in Site Feedback.