The main reason William J. O'Neil does not recommend buying an IPO on its first day of trading is that there is no stock chart available to help you evaluate the stock. Further, it is difficult to determine whether or not an issue is overpriced since there is no well-established market for IPOs. Some issues may be hyped up or heavily oversubscribed, causing the stock to open far above the price set by the underwriter.
After its initial public offering (IPO), it can take weeks, even months, for a new stock to establish a price range where investors feel comfortable. So the best thing to do is wait. Let the stock find its comfort zone.