Question Details

	Username: LuckyWoman Rating: Asked to: Talitha Taslim Date Created: 04 Oct 2018
Category	28
Tag	Financial
Question	What is 'Eating Stock'?

Advice from Guru

Hello LuckyWoman,

Eating stock refers to the forced purchase of a security when there are insufficient buyers. The term generally applies to underwriters of a company’s initial public offering (IPO). However, it also happens when stockbrokers needs to sell shares of a stock that is performing poorly and they are unable to find buyers.

When a company goes public, it requires a certain number of subscribers, or people to purchase shares of the stock. When there aren't enough subscribers to cover the IPO, the underwriter generally steps in to purchase the remaining shares. This is when the underwriter is said to be eating stock.

Sometimes, underwriters have a legal obligation to buy the stock in order to push the IPO through. This can initially put them at a loss despite their underwriting fee.

Ask advice to Talitha Taslim

List of Gurus

Dara Madee

Goro Yang

Jun Wang

Chaoxiang Lee

Heng Kim

Apinya Kamon

Talitha Taslim

Anton Luyten

Jacob Rogers

Tom Burke

Advice

Heng Kim 2019-09-24 03:46:59

Hi PrettyWoman, The job market is the market in which employers search for
Read more
Anton Luyten 2019-09-11 10:12:45

Hello Fluffy, A harami cross is a Japanese candlestick pattern that consists
Read more
Chaoxiang Lee 2019-09-07 11:28:32

Hi Maria, A caplet is a kind of call option based on interest rates. The
Read more
Apinya Kamon 2019-09-04 01:56:33

Hello ForexGuy, A false market occurs when prices are manipulated and impacted
Read more
Tom Burke 2019-08-31 08:08:12

Hello LuckyWoman, The yearly probability of living is determined by consulting
Read more

Heng Kim 2019 - 09 - 24

Hi PrettyWoman, The job market is the market in which employers search for
Read more
Anton Luyten 2019 - 09 - 11

Hello Fluffy, A harami cross is a Japanese candlestick pattern that consists
Read more
Chaoxiang Lee 2019 - 09 - 07

Hi Maria, A caplet is a kind of call option based on interest rates. The
Read more
Apinya Kamon 2019 - 09 - 04

Hello ForexGuy, A false market occurs when prices are manipulated and impacted
Read more
Tom Burke 2019 - 08 - 31

Hello LuckyWoman, The yearly probability of living is determined by consulting
Read more