I will start with the fact that it has nothing to do with after hours or after the open, but rather has it's own place in the stock market lexicon. Investopedia has it as After-Hours Trading - AHT. Some may even think that after market has something to do with when a stockbroker retires. He retired, its the after market now...Wrong.
The "Aftermarket" refers to how a stock trades, usually, after a financing, underwriting, or an event where new shares hit the market. The new shares on the market and how they behave, trade, and the affect the buying and selling has on the volume and price is the aftermarket. The minute after the stock goes public, it trades in the "Aftermarket."
For instance, company A does an IPO and investors purchase the shares before the IPO. The minute the IPO trades, that is the beginning of the aftermarket. Investors will always want to know: How did the stock do in the aftermarket? Did it trade at a premium, at a discount, or open flat. Sometimes the stocks perform well in the aftermarket, other times not well, which depends on pricing, market conditions, how the shares were syndicated, and whether or not the valuation by the underwriter was on the money.
For example: Alibaba (BABA) has had an incredible aftermarket. With secondary offerings, which are priced according to the share price in the market, aftermarket is also gauged on how the stock performed after the financing. Accordingly new equity financings either put pressure on the existing shares, and when new shares are added, investors will ask how is the stock doing in the aftermarket.
© 2017 Stock News Now
Supported by Superior Web Solutions