Wall Street Secrets Revealed #7 – The Greenshoe Option – Part 2

Last month, I talked about the Greenshoe Option and how it applied to the Lyft IPO,

Wall Street Secrets Revealed #7 – The Greenshoe Option

The Greenshoe option, is an over-allotment, typically allowing underwriters to sell up to 15% more shares than the original amount set by the issuer if demand far exceeds supply.

But the Greenshoe option is really a price stabilizer, to ensure that price doesn’t fall below the IPO price.  So if the company’s stock price breaks or falls below the IPO price, the underwriters will buy shares back from the market at the IPO price, which helps to stabilize

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