The Short Answer

How to Spot a Bargain IPO

Karen Wallace, CFP®

Question: Is it a good idea to buy a company at its IPO? I've heard it's better to wait, but how long?

Answer: As you allude in your question, the oft-cited advice is to let the stock price "settle" after an initial public offering before taking the plunge; institutional investors' trading activity can cause an IPO stock to soar on its first day of trading, but this inflated price might not be sustainable. 

Karen Wallace, CFP® does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.