IPOs frequently exhibit substantial price gains, which tend to diminish over time. We examine this phenomenon by focusing on the behavior of sophisticated and well-informedmarket participants, specifically short sellers and stock analysts. Our findings suggest thatfirst-day closing prices often exceed fundamental values, driven by attention and sentimentfueled buying pressure. Short sellers exploit these valuation distortions, likely at the expense of optimistic individual investors. Subsequently, analysts issue relatively conservative initial stock recommendations, contributing to a long-term decline in stock prices.Overall, waiting for post-IPO enthusiasm to subside may help investors avoid the overvaluation inherent in newly listed stock