Why would a stock opening price differ from the offering price?
The offering price is the price at which that IPO is, well, offered. Think of it as a suggested retail price. The opening price is the actual price at which trading begins, on a particular day, for a stock. That price depends on demand/overnight-orders/what-have-you. Think of this as the actual price in the store. "The offering price is what the company will raise by selling the shares at that price.  However, this isn't usually what the general public sees as often there will be shows to drive up demand so that there will be buyers for the stock.  That demand is what you see on the first day when the general public can start buying the stock.  If one is an employee, relative or friend of someone that is offered, ""Friends and Family"" shares they may be able to buy at the offering price. Pricing of IPO from Wikipedia states around the idea of pricing: A company planning an IPO typically appoints a lead manager, known as   a bookrunner, to help it arrive at an appropriate price at which the   shares should be issued. There are two primary ways in which the price   of an IPO can be determined. Either the company, with the help of its   lead managers, fixes a price (""fixed price method""), or the price can   be determined through analysis of confidential investor demand data   compiled by the bookrunner (""book building""). Historically, some IPOs both globally and in the United States have   been underpriced. The effect of ""initial underpricing"" an IPO is to   generate additional interest in the stock when it first becomes   publicly traded. Flipping, or quickly selling shares for a profit, can   lead to significant gains for investors who have been allocated shares   of the IPO at the offering price. However, underpricing an IPO results   in lost potential capital for the issuer. One extreme example is   theglobe.com IPO which helped fuel the IPO ""mania"" of the late 90's   internet era. Underwritten by Bear Stearns on November 13, 1998, the   IPO was priced at $9 per share. The share price quickly increased   1000% after the opening of trading, to a high of $97. Selling pressure   from institutional flipping eventually drove the stock back down, and   it closed the day at $63. Although the company did raise about $30   million from the offering it is estimated that with the level of   demand for the offering and the volume of trading that took place the   company might have left upwards of $200 million on the table. The danger of overpricing is also an important consideration. If a   stock is offered to the public at a higher price than the market will   pay, the underwriters may have trouble meeting their commitments to   sell shares. Even if they sell all of the issued shares, the stock may   fall in value on the first day of trading. If so, the stock may lose   its marketability and hence even more of its value. This could result   in losses for investors, many of whom being the most favored clients   of the underwriters. Perhaps the best known example of this is the   Facebook IPO in 2012. Underwriters, therefore, take many factors into consideration when   pricing an IPO, and attempt to reach an offering price that is low   enough to stimulate interest in the stock, but high enough to raise an   adequate amount of capital for the company. The process of determining   an optimal price usually involves the underwriters (""syndicate"")   arranging share purchase commitments from leading institutional   investors. Some researchers (e.g. Geoffrey C., and C. Swift, 2009) believe that   the underpricing of IPOs is less a deliberate act on the part of   issuers and/or underwriters, than the result of an over-reaction on   the part of investors (Friesen & Swift, 2009). One potential method   for determining underpricing is through the use of IPO Underpricing   Algorithms. This may be useful for seeing the difference in that ""theglobe.com"" example where the offering price is $9/share yet the stock traded much higher than that initially." The opening price is derived from new information received. It reflects the current state of the market. Opening Price Deviation (from Investopedia): Investor expectation can be changed by corporate announcements or   other events that make the news. Corporations typically make   news-worthy announcements that may have an effect on the stock price   after the market closes. Large-scale natural disasters or man-made   disasters such as wars or terrorist attacks that take place in the   afterhours may have similar effects on stock prices. When this   happens, some investors may attempt to either buy or sell securities   during the afterhours. Not all orders are executed during after-hours trading. The lack of   liquidity and the resulting wide spreads make market orders   unattractive to traders in after-hours trading. This results in a   large amount of limit or stop orders being placed at a price that is   different from the prior day’s closing price. Consequently, when the   market opens the next day, a substantial disparity in supply and   demand causes the open to veer away from the prior day’s close in the   direction that corresponds to the effect of the announcement, news or   event.
Besides overnight news events and auction mechanisms there is a more fundamental reason the price of a stock is always moving.  Theoretically the stock price will move slightly even in the unlikely scenario that absolutely nothing of interest happens during the entire night.  Let me go into that in some more detail: Stock valuation using Discounted Cash FLow One of the fundamental reasons that stock value is constantly changing is because underneath every stock there is a company that expects to make some kind of profit or loss in the future. We have to go into the fundamentals of stock value to understand why this is important: One popular way to determine the value of a stock is by looking into the future and summing up all the earnings (or cashflows) it has yet to produce. You have to reduce each amount by a certain factor that gets larger for payments that are farther into the future. Think of it this way: a dollar in hand now is better than a dollar that you get tomorrow. This method of valuation is called Discounted Cash Flow (abbr. DCF; see the wikipedia article on DCF) Time's effect on stock value Now take the Close price C, and the open price O. Let's assume that since there has been no news, the expectations for future earnings are the same for C and O. Remember that the discounting factor for these earnings is dependent on the time until the cashflow occurs? For O, this time is slightly shorter than for C, and therefore the value will be slightly higher (or lower, when the company is expected to incur losses). So now you can see that even without all the external forces that continuously push and pull on the stock price, a stock still changes in value over time. Hope this helps. "In the case of an ""initial public offering"", the brokers underwriting the share issue will look at the current earnings being generated by the company and compare these to those of other competitor companies already listed in the stock market.  For example, if a new telephone company is undertaking an initial public offering, then the share price of those telephone companies which are already traded on the stock market will serve as a reference for how much investors will be willing to pay for the new company's shares.  If investors are willing to pay 15 times earnings for telecom shares, then this will be the benchmark used in determining the new share price. In addition, comparative growth prospects will be taken into account.  Finally, the underwriter will want to see a successful sale, so they will tend to ""slightly under price"" the new shares in order to make them attractive. None of this is an exact science and we often see shares trading at a large premium to the initial offer price during the first few days of trading.  More often that not, prices then settle down to something closer to the offer price.  The initial price spike is usually the result of high demand for the shares by investors who believe that past examples of a price spike will repeat with this initial public offering.  There will also usually be high demand for the new shares from funds that specialise in shares of the type being issued. In the case of a ""rights issue"", where an existing publicly traded company wishes to raise capital by issuing new shares, the company will price the new shares at a significant discount to the current market price.  The new shares will be initially offered to existing shares holders and the discounted price is intended to encourage the existing shareholders to exercise their ""rights"" since the new shares may have the effect of diluting the value of their shares.  Any shares which are not purchased by existing share holder will then be offered for sale in the market." The price gaps up because the offer is for a price above the current price. Therefore people want to buy now before the price jumps to the offer level. Of course it does depend on the tone of the announcement,  which party is making the announcement, and are they announcing an offer or a deal. If the price is $10, and the offer is for $12; then the price may quickly jump. The early buyers will make the most quick money. They hope that the deal is done quickly, or if not the final price ends up higher.  There are risks. The company could reject the offer. The due diligence could expose a problem. The regulators could reject the deal based on anti-trust issues. The deal could take many months to complete. Or the final deal could be for shares in the new company.  The risks are one reason people sell after the deal/offer is announced. In other cases the seller finally is seeing a profit, or a smaller loss and wants out while they can. Originally, stocks were ownership in a company just like any other business- you expected to make a profit from your investment, which is what we call dividends to stock holders. Since these dividends had real value, the stock price was based on what this return rate was, factoring in what it might be expected to be in the future, etc.  Nowdays many companies never issue any dividends, so you have to consider the full value of the company and what benefit could be gained by another company if it were to acquire it. the market will likely adjust the share price to factor in what the value of the company might be to an acquirer.  But otherwise, some companies today trading at an astronimical price, and which nevers pays a dividend- chalk it up to market stupidity. In this investor'd mind, there is no logical reason for these prices, except based on the idea that someone else might pay you more for it later... for what reason? I can't figure it out. Take it back to it's roots and imagine pitching a new business idea to you uncle to invest in- it will make almost nothing compared to it's share price, and even what it does make it won't pay anything to him for his investment. Why wouldn't he just laugh at you? "I think ""Psychological Pricing"" is a similar phenomenon to what you are looking for.  This is where retailers use certain numbers in prices because those prices are more appealing to consumers.  Since stocks - and in your case bitcoin - have prices, they too will be more or less appealing at different prices based on psychology alone." You bought 1 share of Google at $67.05 while it has a current trading price of $1204.11. Now, if you bought a widget for under $70 and it currently sells for over $1200 that is quite the increase, no? Be careful of what prices you enter into a portfolio tool as some people may be able to use options to have a strike price different than the current trading price by a sizable difference. Take the gain of $1122.06 on an initial cost of $82.05 for seeing where the 1367% is coming. User error on the portfolio will lead to misleading statistics I think as you meant to put in something else, right? When a stock is going to become public there's a level of analysis required to figure out the range of IPO price that makes sense. For a company that's somewhat mature, and has a sector to compare it to, you can come up with a range that would be pretty close. For the recent linkedin, it's tougher to price a somewhat unique company, running at a loss, in a market rich with cash looking for the next great deal. If one gives this any thought, an opening price that's so far above the IPO price represents a failure of the underwriters to price it correctly. It means the original owners just sold theirvshares for far less than the market thought they were worth on day one. The day of IPO the stock opens similar to how any stock would open at 9:30, there are bids and asks and a price at which supply (the ask) and demand (bid) balance. For this IPO, it would appear that there were enough buyers to push the price to twice the anticipated open and it's maintained that level since.  It's possible to have a different system in which a Dutch auction is used to make the shares public, in theory this can work, it's just not used commonly. By definition, an IPO'd stock is publicly traded, and you can buy shares if you wish. There's often an excitement on the first day that doesn't carry over to the next days or weeks.  The opening price may be well above the IPO price, depending on that demand. You may simply be asking why stocks 'gap up' or 'gap down' when the stock market opens. This is because the price adjusts to news that occurred while the exchanges were closed overnight. Perhaps Asian stocks crashed, or perhaps a news story was released in the New York Times about some major company. There are thousands of factors that affect market sentiment, and the big gaps that happen at the open of every trading day is the price of the stocks catching up to those factors. The IPO price is set between the underwriters and the specialist in the NASDAQ. There are a lot of complexities on how to get to this price, everyone is trying to pull to their own side. In the Facebook example, the price was $38 for all IPO participants. Then, once the IPO went to the secondary market, the bid/ask drove the pricing.  At the secondary market the price is driven by the demand and offer of the stock.  That is, people who wanted to buy right after the IPO likely drove the initial price up. A company's stock value is indicative of the market's collective belief of the future of the company. The relationship of between price and book value will vary according to the quality of the company, the category of stock, etc. In extreme cases, say Bank of America, the stock trades at a fraction of book, because BOA's books are a fantasy by most people's reckoning. A stock's price does not move in a completely continuous fashion.  It moves in discrete steps depending on who is buying/selling at given prices. I'm guessing that by opening bell the price for buying/selling a particular stock has changed based on information obtained overnight. A company's stock closes at $40.  Overnight, news breaks that the company's top selling product has a massive defect.  The next morning the market opens.  Are there any buyers of the stock at $40?  Probably not.  The first trade of the stock takes place at $30 and is thus, not the same as the previous day's close. In general a stock can open at absolutely any price with no regard for the closing price or after hours price the previous day. The opening price will be determined by the best bid and offer made by people who decide to trade the next day.  Some of the those people may have put orders in on a prior day that are still on the books and matter, but there's a lot of time overnight for people to cancel orders and enter new ones, which is especially likely to happen if there was substantive news overnight. As for what you can do in your case, you have the same options that you always had:  Sell or hold.  If you're selling, you can sell after hours, in the pre-open hours, or during the trading day.  There's nothing we can say about this case that's really any different than we can say about any other stock on any other day. This would otherwise be a comment, but I wish to share an image. A stock I happened to own, gapped up on the open to $9.20 and slowly worked its way down to $8.19 where it closed up 6% but near its low for the day.  This is an addendum to my comment above, warning about buying a stock on the open when news is coming out. Or more important, to be mindful of that news and the impact it might have on the stock. In this case, when the news came out and the stock had closed at $7.73, one would need to decide if he wished to buy it at any cost, or place a limit order.  I've redacted the name of the company, as this discussion has nothing to do with any particular stock, I'm just offering an example of the effect I warned about, three weeks ago. (Full disclosure, I got out at $8.70 in the first minutes of trading.) "I don't have experience with TSP in particular, but they look to be roughly the same as 401(k) loans. If the ""G Fund rate"" is equal to the yield of government bonds, then your main risk is the risk that yields increase, which means the interest you're paying is less than what you would have earned on the investments. Here are some other things to consider: For any car loan, I would borrow as little as possible with as short a term as possible.  To me, the interest savings and additional risks from borrowing from your retirement isn't worth it."