Why don't IPOs start trading at the open bell?

Last week saw two hot IPOs, the debuts of $Roblox Corporation(RBLX.US)$ and $Coupang(CPNG.US)$, and this week IPOs of $Olo Inc(OLO.US)$, $Tuya Inc(TUYA.US)$ and $VINE ENERGY INC.(VEI.US)$ are on the way.

Some inexperienced investors may be confused Why don't IPOs begin trading immediately at 9:30 a.m. when the market opens and how to determine the opening price.

The actual mechanics of what happens are somewhat complicated, but the basic principle is simple economics: the price is determined by the balance of supply and demand. However, the system on NYSE differs from NASDAQ.

New York Stock Exchange (NYSE) has a system for Initial Public Offerings called Price Discovery, a rather old practice where the Designated Market Maker (DMM) leads the discovery of interest on the IPO based on a number of points. 

This ultimately results in a sort of auction for the IPO on the exchange floor before open trading is allowed, while traders centered around the DMM and the big buy and sell orders are matched. This process can take a few hours. Once the DMM feels confident they have a solid price to go to market, the official trading then begins. 

As for IPOs on the Nasdaq market, they go through another process called the "IPO Cross". On the morning that an IPO begins trading on NASDAQ, the exchange starts the process, and traders can submit buy and sell orders during that time. The Nasdaq exchange matches up those orders in real-time on its electronic marketplace and sets the opening price. 

Source: Nasdaqomxtrader.com

The process normally doesn't take a long time, so the reason for IPOs to start trading late is not technical problems but matters of style. The company can decide when to debut and works with Nasdaq to set the time. 

To sum up, both processes on two exchanges aim to provide fair executions at a special price which can be stable within a reasonable range. Therefore, the precise time when IPOs start trading is always uncertain, while some hot IPOs don't start trading until afternoon.