Airtasker Ltd (ASX: ART) shares have finally taken a breather after briefly touching $1.965 today. The Airtasker share price had surged 202% from its listing price of 65 cents to hit the intraday high today.
However, the company’s shares have since been sold down and, at the time of writing, are trading 16.57% lower at $1.46.
How did the Airtasker share price surge 200% in just three days?
Initial public offerings (IPOs) can be highly volatile and unpredictable in nature. But it isn’t unusual for an IPO to deliver triple-digit returns in a short time frame.
Airtasker highlighted significant demand for its IPO, noting that it was more than five times oversubscribed by institutional and retail investors. This means that more than $400 million was put up by investors compared to the $83.7 million the IPO was looking for.
Yesterday, more than 100 million shares or ~25% of its 392.9 million shares outstanding were traded. The significant demand for Airtasker shares and volume is likely a contributing factor to its soaring share price.
Will history repeat itself?
Many successful IPOs in the past have experienced boom, bust and consolidation cycles.
Douugh Ltd (ASX: DOU), for example, is a fintech company that offers consumers a complete financial wellness platform incorporating budgeting, banking and investment features. Its shares ran more than 1,500% in just two weeks from its listing price of 3 cents to a peak of 49 cents.
IPOs that boom also have the tendency to bust, with the Douugh share price more than halving in subsequent months. Its shares are still significantly higher than its listing price, but that isn’t the case for investors who thought buying at 40 cents was a good idea.
A similar narrative played out for other ASX IPOs including 4DMedical Ltd (ASX: 4DX), Credit Clear Ltd (ASX: CCR), DC Two Ltd (ASX: DC2) and Doctor Care Anywhere Group PLC (ASX: DOC).
These IPOs have all demonstrated some degree of significant shareholder return for those participating from the outset before the shares were brought back down to reality in subsequent weeks or months.
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More reading
- Why Airtasker, Netwealth, Piedmont Lithium, & Resolute Mining are tumbling lower
- ASX 200 rises, Airtasker soars again, Westpac considers NZ
- Airtasker (ASX:ART) share price surges a further 86% higher
- How does Airtasker (ASX:ART) stack up against its peers?
- ASX 200 dips, travel shares drop, Pushpay soars
Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Doctor Care Anywhere Group PLC. The Motley Fool Australia has recommended Doctor Care Anywhere Group PLC. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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