Oversubscribed

Ask your grandparents about the magazine industry. It produced a product that was the precursor to bathroom iPhone reading. And buyers subscribed to it. Weekly. Monthly. Something like that.

Every now and then an issue would come out that was so popular, so catchy, so gotta must have it, that it was “oversubscribed” and the printing presses had to run another 24 hours to make up for the huge demand.

Well, in the land of finance, the term oversubscribed is usually as-cribed to a hot IPO. When you subscribe in a securities offering, you are essentially signing up to buy a given volume of that security at a given price within a certain time window.

That is, a given company: whatever.com offers 5 million shares to the public at 10 bucks a share. But the roadshow was such a hit that the bankers could raise prices to 12 bucks and exercise their greenshoe option and sell a whole trunkful of additional shares to the public, making commissions on all of them.

More shares. Higher prices. Kinda sounds like a Walmart slogan.

The shares being oversubscribed were all a result of the extremely hot and high demand for shares by the investing public. So yeah. That’s “oversubscribed.”

A problem we here at Shmoop would love to have…