The bids for the IPO started at $12. The bankers puffed chest during the roadshow. You could feel their bluster in the red herring marketing docs. They whispered about "a chicken in every pot," the old FDR “we’re a wealthy nation now” speech. And yes, in those days, a chicken in your pot meant wealth.
But FlyingCarsDontCrash was a radical idea. The company was the drone management system for cars. They’d check in every few hundred feet via super mega bluetooth and wifi signals emanating from plates on top of billboards and telephone poles and chimneys. So, on the big day, the first bids before the open of the stock came in at $13.37 then $13.58 then $13.69…seemed like they went up a dime or so every 30 seconds.
And yet there were still 90 minutes before the big open. Then some journalist tweeted that she thought the company was wildly conservative in its estimates of its earnings of $0.80 a share next year, that the journalist thought they could earn 5 bucks. It was like a gun went off...in a good way (i.e. you’re a hunter, and not a horny moose).
The next bid came in at a flat $14 for that first block of 100,000 shares; the next came in at $15, then $16 and change. And it kept going, until the final IPO first print price came in at $37.50 and the shape of those bids (price over time in minutes) looked something like a hockey stick.
It rose a while in the beginning, and then the rate of rising accelerated with time until the slope went from 10 degrees to more like 80.
Yeah, that’s a hockey stick chart. And it's a common pattern when bidders get all hopped up on caffeine and bubble tea. They have to sit in the penalty box to cool down.