HOW important is first-day share price performance as a metric to gauge the success, or failure, of a new listing?
Investors and financial media often use the day-one "pop or drop" to determine how well an initial public offering (IPO) has performed.
This explains the headlines published after shares of ride-hailing company Uber Technologies crashed more than 7 per cent on its first trading day.
Steep price drops on a stock's debut day could mean that it was overpriced to begin with. But to attribute the price plunge solely to mispricing would assume an efficient market that is able to uncover the "true value" of a stock - whatever that is.
This is the conclusion that many have drawn about Uber;...