BROWSE

Eating Stock

What is 'Eating Stock'

The forced purchase of a security when there are insufficient buyers. Eating stock often applies to underwriters of an initial public offering (IPO), if a certain level of subscription is guaranteed but is not met. This allows the company going public to have a better approximation for the amount of capital it will raise from the offering.

Explaining 'Eating Stock'

Underwriters mitigate the risk associated with eating stock, in IPOs that it offers, by charging a substantial underwriting fee. Eating stock does not mean that the underwriter will take a loss on the entire venture, as the underwriting fee may exceed the cost of shares that it was forced to absorb.


Further Reading


Finance in economic growth: Eating the family cow
papers.ssrn.com [PDF]
Page 1. Finance in Economic Growth: Eating the Family Cow Peter Temin1 … JEL Codes: B40, G19, N12 Keywords: NIPA, BEA, finance, economics growth, human capital, social capital … not generally counted in national income.) More significantly, stock market values, the financial …

Finance and Intangibles in American Economic Growth: Eating the Family CowFinance and Intangibles in American Economic Growth: Eating the Family Cow
www.tandfonline.com [PDF]
Page 1. Finance in Economic Growth: Eating the Family Cow Peter Temin1 … JEL Codes: B40, G19, N12 Keywords: NIPA, BEA, finance, economics growth, human capital, social capital … not generally counted in national income.) More significantly, stock market values, the financial …

Identifying innovative interventions to promote healthy eating using consumption-oriented food supply chain analysisIdentifying innovative interventions to promote healthy eating using consumption-oriented food supply chain analysis
www.tandfonline.com [PDF]
Page 1. Finance in Economic Growth: Eating the Family Cow Peter Temin1 … JEL Codes: B40, G19, N12 Keywords: NIPA, BEA, finance, economics growth, human capital, social capital … not generally counted in national income.) More significantly, stock market values, the financial …

Trying to have your cake and eating it: how and why the state system has created offshoreTrying to have your cake and eating it: how and why the state system has created offshore
academic.oup.com [PDF]
Page 1. Finance in Economic Growth: Eating the Family Cow Peter Temin1 … JEL Codes: B40, G19, N12 Keywords: NIPA, BEA, finance, economics growth, human capital, social capital … not generally counted in national income.) More significantly, stock market values, the financial …

Institutional investors and the Monday effect on tourism stocksInstitutional investors and the Monday effect on tourism stocks
www.sciencedirect.com [PDF]
Page 1. Finance in Economic Growth: Eating the Family Cow Peter Temin1 … JEL Codes: B40, G19, N12 Keywords: NIPA, BEA, finance, economics growth, human capital, social capital … not generally counted in national income.) More significantly, stock market values, the financial …

Risk and volatility: Econometric models and financial practiceRisk and volatility: Econometric models and financial practice
pubs.aeaweb.org [PDF]
Page 1. Finance in Economic Growth: Eating the Family Cow Peter Temin1 … JEL Codes: B40, G19, N12 Keywords: NIPA, BEA, finance, economics growth, human capital, social capital … not generally counted in national income.) More significantly, stock market values, the financial …

Food Rx: a community–university partnership to prescribe healthy eating on the South Side of ChicagoFood Rx: a community–university partnership to prescribe healthy eating on the South Side of Chicago
www.tandfonline.com [PDF]
Page 1. Finance in Economic Growth: Eating the Family Cow Peter Temin1 … JEL Codes: B40, G19, N12 Keywords: NIPA, BEA, finance, economics growth, human capital, social capital … not generally counted in national income.) More significantly, stock market values, the financial …

Optimally eating a stochastic cake: a recursive utility approachOptimally eating a stochastic cake: a recursive utility approach
www.sciencedirect.com [PDF]
Page 1. Finance in Economic Growth: Eating the Family Cow Peter Temin1 … JEL Codes: B40, G19, N12 Keywords: NIPA, BEA, finance, economics growth, human capital, social capital … not generally counted in national income.) More significantly, stock market values, the financial …



Q&A About Eating Stock


Does eating stock mean that the underwriter will take a loss on the entire venture?

No, it does not mean that at all. In fact, they may make money from charging fees for taking on this risk.

What are some examples of corporate cannibalism?

An example of corporate cannibalism would be when Apple introduced the iPod, which ate up sales from their already established Walkman brand. Another example would be when Foxconn created low-cost manufacturing plants in China that allowed Apple to produce cheaper products for consumers.

How can market cannibalization affect a company's bottom line?

Cannibalization can have either positive or negative effects on a company's bottom line.

What is market cannibalization?

Market cannibalization is the practice of slashing the price of a product or introducing a new product into an established market.

Who eats stock in an IPO?

The underwriters eat stock.

Why do underwriters eat stock?

Underwriters eat stock because they want to mitigate their risk associated with the IPO.

What is eating stock?

Eating stock refers to the forced purchase of a security when there are insufficient buyers.

How do underwriters mitigate their risk associated with eating stock?

They charge a substantial fee for taking on this risk.