Underpricing is how IPOs get marketed to Wall Street "safely."
IPOs carry a ton of risk. Unproven trading history. No history of a given set of investors owning them. Short-term relationships between management and the Street. So the IPO gets priced "low" to then give more certainty that the shares will get placed, i.e. oversubscribed.
And then the IPO price rocks northward right after the first prints. Early investors are happy. Good vibes spread across the Street. Loyal owners and new buyers materialize out of nowhere. And all is happy in the world (except maybe the original shareholders of the company before the IPO, who were a bit more diluted in their ownership positions via the underpricing, compared to what they would have been had the IPO been priced at market; in practice, early investors will have made so much money that they really don't complain much about making "only" 87 times their money, instead of 94.)
