Definition
Flipping (IPO)
Flipping is the practice of selling IPO shares quickly after listing — often on listing day — to lock in listing gains rather than holding for the long term.
Many retail and HNI allottees flip their shares on listing day to capture the pop. SEBI studies have shown that a large fraction of retail IPO investors sell within a week of listing, especially when the stock lists at a premium.
While flipping is legal, heavy flipping adds volatility on listing day and can pressure the price. The staggered anchor lock-in was partly designed to prevent large institutional investors from flipping en masse and destabilising newly listed stocks.
Related terms
- Anchor Lock-inAnchor lock-in is the mandatory period for which anchor investors must hold their IPO shares before they can sell.
- Listing DayListing day is the first day an IPO's shares are admitted to trading on the stock exchange.
- Listing GainListing gain is the profit an investor makes when an IPO share lists on the exchange above its issue price.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.