Jay Ritter

A lot goes into pricing a stock IPO

Semiconductor designer Arm Holdings sold shares to the public Thursday. The IPO valued Arm at about $55 billion. Before the stock hit Nasdaq, big institutional investors had lined up to get a piece of the company and sent nearly $5 billion Arm’s way for shares that are now trading on the open market.

The initial price was $51 per share, which was, you could say, a decision. That offering price is a choice. Marketplace looked into how that choice is made with insights from Cordell Eminent Scholar Jay Ritter.

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