IPO Oversubscription Mania

Definition

IPO oversubscription mania refers to the phenomenon where investor demand for new public issues far exceeds supply, often driven by hype, FOMO, and short-term profit expectations. In India, this trend spiked during the 2020–2021 bull run.

Case Study

During a popular tech IPO in India, a large number of retail investors rushed to apply after hearing that the issue was oversubscribed many times within the first few hours. People in housing societies, offices, and WhatsApp groups kept forwarding screenshots of the rising subscription figures, creating excitement that the IPO was a guaranteed opportunity. Even investors who knew nothing about the company’s business model or financials applied for the maximum allowable amount simply because everyone around them was doing the same. The fear of missing out grew so quickly that demand far exceeded the actual supply of shares, despite the company having weak profitability and aggressive valuations. This wave of enthusiasm was driven more by crowd excitement than by careful analysis.

Historical Reference

India witnessed similar frenzies in 2007, 2010, and 2021. Behavioral drivers include scarcity illusion, herd mentality, and hype amplification via influencers and media.