[manyhats]

Adding a little more detail on the mechanics of a typical capital markets raise to your answer, there's an overallotment on the "target" raise, which the bookrunner (lead underwriter) will use to stabilize the price.

For example, ABC Inc. wants to raise $100 in an IPO, and intends to sell 100 shares at $1. The underwriters will sell 115 shares at $1 (the extra 15 shares are the overallotment) and the company sells the bank 100 shares and grants the bank the option (but not the obligation) to purchase another 15 shares from the company for $1.

One bank from the underwriting syndicate will take responsibility to stabilize the price when the issue starts trading, which means that the initial sellers might be selling to "true" buyers, or if there aren't any above the IPO price, the bank.

If the price is above the IPO price once the stabilization period is over (30 days), and the bank hasn't bought back those "extra" 15 shares (in whole or part) during the period, the bank will call the extra shares from the company for $1 to close out their initial 15 share short position from the initial IPO overallocation, and instead of raising $100, the company will have raised $100+overallotment.

If the IPO priced too high, the bank will quickly run through its 15 share overallotment trying the stem the stock price fall and you'll see the price break through the IPO price. In this case, the bank naturally will have closed out the 15 share short position, and ABC Inc. will have raised the initial $100.

[nemo44x]

This is known as a "Greenshoe Option". It got the name from a company called "Green Shoe Manufacturing" which was the first company to allow this practice.