Offer Price vs. Opening Price
The offer price is what allocated investors pay the night before trading begins. The opening price is what the first public trade clears at the next morning. They are produced by two completely different mechanisms — one a negotiation, one an auction — and nothing requires them to match. When demand exceeds the shares available at the offer price, the open is higher, sometimes dramatically.
Figma priced at $33 in July 2025 and opened at $85. Both numbers were correct. They were answering different questions.
What is the offer price?
The price at which the company sells shares to investors in the offering itself. It is set on pricing night — after the market closes, the evening before trading — by the company and its underwriters, based on the demand collected during bookbuilding.
It is a negotiated number. The company wants the highest defensible price, because every dollar goes to it or to its selling shareholders. The underwriters typically advocate for something slightly below where they think the market will clear, for reasons ranging from the defensible to the self-interested.
The offer price is recorded on the cover of the final prospectus, filed on Form 424B4. It is the number in "raised $X billion."
See How is an IPO priced?.
What is the opening price?
The price of the first public trade, produced by an opening auction run by the exchange.
Between the moment the offer price is set and the moment trading begins, orders accumulate — from investors who received no allocation, from investors who want more than they got, and from allocated investors who want to sell immediately. The exchange matches all of that interest and finds the price that clears the most volume.
That process has no memory of the offer price. It is answering a different question: not "what will investors pay in a negotiated placement" but "what does the open market clear at right now."
See IPO opening auction.
Why do they differ so much?
Four reasons, compounding.
The offer price is set against a curve, not a point. Bookbuilding tells underwriters roughly how much demand exists at various prices. They price below the level where demand exactly exhausts supply, deliberately, leaving the deal covered several times over. That excess demand doesn't evaporate at the open — it goes into the auction.
Allocation is restricted; the open market isn't. Only investors the underwriters chose could buy at the offer price. Everyone else — retail, institutions who were left out, index-adjacent buyers — can only buy at the open. That is a much larger pool of demand meeting the same limited supply.
The float is usually small. Most IPOs sell a modest fraction of shares outstanding. A small float against broad demand produces a high clearing price.
Allocated holders mostly don't sell immediately. Underwriters allocate to investors they expect to hold. If most allocated shares stay put, the shares actually available at the open are fewer still.
See Why do IPOs pop?.
Who captures the difference?
Whoever received an allocation at the offer price.
The gap between offer and open represents value that did not go to the company or its selling shareholders. On a deal that priced at $33 and opened at $85, every share sold in the offering transferred roughly $52 of first-trade value to the allocated buyer rather than the issuer.
We describe the total as money left on the table, calculated against the first-day close rather than the open. It is a descriptive figure, not proof the deal could have priced higher — pricing higher changes the demand that produced the outcome — but it is real value, and it is one reason companies have experimented with direct listings and auctions.
See IPO vs. direct listing · Dutch auction IPO.
Can a retail investor buy at the offer price?
Rarely, and never by default.
Shares at the offer price are allocated by the underwriters, not sold on an open market. Allocation weights toward institutional investors the banks expect to hold rather than flip. Some brokerages receive allocations to distribute to clients, usually with eligibility criteria. Many companies run a directed share programme setting aside shares for employees, customers, or people connected to the business.
Absent one of those routes, a retail investor's first opportunity is the open — at whatever the auction produced.
This is the single most important practical consequence of the distinction. Coverage that says "the IPO returned 250% on its first day" is describing the return to allocated investors. A retail buyer at the open experienced something entirely different, and often worse.
See How to buy an IPO · IPO allocation.
Which number is the "IPO price"?
Both get called that, which is the source of most of the confusion.
In precise usage, the IPO price or offer price is the negotiated price in the offering. The opening price is the opening price. When a company says it raised $6 billion, that's computed from the offer price. When a news story says a stock "soared on its debut," that's usually offer-to-close or offer-to-open.
Because the three possible measurements diverge sharply on volatile debuts, we state which one we're using every time:
| Metric | Formula | What it measures |
|---|---|---|
| Offer-to-open | (open − offer) / offer | What an allocated investor held at the open |
| Offer-to-close | (first-day close − offer) / offer | Our default. The academic convention |
| Open-to-close | (close − open) / open | What a buyer at the open actually earned |
On a deal that priced at $33, opened at $85, and closed at $115.50, those three numbers are +158%, +250%, and +36%. All describe the same day.
See Methodology.
Can the opening price be below the offer price?
Yes, and it happens regularly. A stock that opens or trades below its offer price is said to have broken issue.
This is not rare and not always a disaster. It means the offer price was set at or above where the open market clears — which, from the company's perspective, means it captured full value rather than leaving money on the table. It is uncomfortable for the allocated investors and for the bankers who sold it to them.
Underwriters may support the price in the aftermarket through stabilisation, permitted under Regulation M, primarily by buying in the open market to cover the short position created by over-allotting shares.
See IPO stabilization · Greenshoe option.
Why does the opening trade sometimes happen hours after the market opens?
Because IPO opening auctions take as long as they take.
On the NYSE, a Designated Market Maker manages the process, publishing price indications as orders accumulate and consulting with the lead underwriter before opening the stock. On Nasdaq, the IPO cross runs through a display-only period during which orders are entered and indicative prices disseminated, with the stabilisation agent confirming readiness before launch.
A stock that opens at 11:40 rather than 9:30 isn't malfunctioning. The auction is still finding a price that clears.
See IPO opening auction.
Quick answers
What's the difference in one sentence? The offer price is negotiated and allocated; the opening price is auctioned and open to everyone.
Which one does the company receive? The offer price, less the underwriting discount.
Why is the opening price usually higher? Restricted allocation plus a small float meeting unrestricted demand.
Can I place an order before the stock opens? Depending on your broker, you may be able to enter an order into the opening auction. You are not buying at the offer price by doing so.
Does a big gap mean the bankers got it wrong? Not necessarily, though it is the central question in the underpricing debate. See Why do IPOs pop?.
Is a direct listing different? Yes. There's no offer price at all — the exchange publishes a reference price and the opening auction does the rest. See IPO vs. direct listing.
Related
Why do IPOs pop? · IPO opening auction · How is an IPO priced? · IPO allocation · How to buy an IPO · What happens on IPO day?
Sources
- NYSE IPO Guide and NYSE auction materials
- Nasdaq IPO cross and listing process materials
- Regulation M — stabilisation
- Issuer final prospectuses on EDGAR
- The IPO Radar filing and pricing database — Methodology