The market reaction to an Initial Public Offering (IPO) is typically assessed by measuring the performance of the shares in the aftermarket. The aftermarket refers to the period after the shares start trading on the stock exchange, and it is when investors can buy and sell the shares freely on the open market.

The aftermarket performance of the shares can be influenced by a variety of factors, including:

Market conditions: The overall state of the stock market can influence the aftermarket performance of an IPO. If the market is in a bullish phase, with rising share prices and high levels of investor confidence, then the IPO is more likely to perform well. Conversely, if the market is in a bearish phase, with falling share prices and low levels of investor confidence, then the IPO may struggle to gain traction.

Company fundamentals: The financial health of the company, including its revenue, profits, and growth prospects, can have a significant impact on the aftermarket performance of its shares. Investors are more likely to be attracted to companies that are profitable, have a strong balance sheet, and have a clear strategy for growth.

Valuation: The price at which the shares are offered to the public can also affect their aftermarket performance. If the shares are priced too high, then investors may be hesitant to buy them, and the shares may struggle to gain traction. On the other hand, if the shares are priced too low, then the company may be leaving money on the table and missing out on potential profits.

Investor sentiment: Investor sentiment, or the mood of investors towards a particular stock or sector, can also influence the aftermarket performance of an IPO. If investors are excited about the company and its prospects, then the shares are more likely to perform well. Conversely, if investors are cautious or skeptical about the company, then the shares may struggle to gain traction.