HOW BUBBLE BURST AFFECT INDONESIAN STOCK TRADERS IN THE INITIAL PUBLIC OFFERING (IPO)

• Main Author: Septian Anwar, Rivan
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/77347
• Institution: Institut Teknologi Bandung

Stock Trading involves private investors buying and selling a company’s shares. It has been a lifestyle in Indonesia with the hope of earning passive income and gaining a portfolio. One critical stage in a company's journey is the Initial Public Offering (IPO), which allows private firms to sell shares to the public for the first time, enabling them to raise equity capital. While IPOs can present attractive opportunities for traders due to the availability of cheap shares, they also come with substantial risks, particularly the possibility of an economic bubble. IPO bubble collapses can harm a company's reputation and investors' finances. Recent data in Indonesia, indicating a concerning trend of high-profile IPOs trading below their issue pricing. The study aims to understand the signs, causes, and effects of IPO bubbles on firms and investors. A qualitative method was employed by interviewing five Indonesian professional investors/traders that had a prior encounter with the IPO Bubble. It was shown that there are many signs, including: High Consumption, Overvalued, Price Increase. Signs shown will eventually lead to the causes of IPO Bubble, including: Over Optimistic Investors, Hype, Inadequate Knowledge. The effects of which the IPO Bubble caused towards both investors and companies includes; Enormous losses, Economic Instability, Traumatized, and Overvalued. This research contributes to the knowledge of Indonesian stock traders/investors by proposing strategies to mitigate risks based on professionals which had an experience in this field.