China Mobile Games and Entertainment Group Ltd saw no trading on its debut on the Nasdaq due to a huge bid-ask spread.
Data from the stock exchange showed that the minimum selling price was $40 per share, while the buying price reached only $3.9 per share, a huge gap that resulted in zero trading volume at the close on Tuesday.
The bid-ask pricing equation reflects the different valuations that individual market participants ascribe to a certain stock. In more volatile stocks, bid-ask spreads tend to be wider, indicating the greater range of possible share price valuations and the lower likelihood of converting the shares to cash easily.
As a listing by way of introduction - which is the case with CMGE's listing - does not necessarily involve financing in the first place, the company might see a shortage of investment during the initial stage.
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