Undersubscribed

In finance, it is common to describe the same situation as “underbooking,” referring to the same situation in which the demand for securities is smaller than the offered batch. 

An offering is considered undersubscribed when the underwriter faces difficulty in generating sufficient interest in the shares being offered for sale. Since a definitive offering price does not have to be set at the very beginning, potential buyers typically express interest in a specific quantity of shares. This approach allows the underwriter to assess the demand for the offering, known as “indications of interest,” and understand whether or not a given price is fair. 

In cases where demand is insufficient, the underwriter and issuer may lower the price in order to attract more subscribers. Conversely, if the demand surpasses the available supply (resulting in a shortage), it indicates that a higher price could have been set, enabling the issuer to raise more capital. However, if the price is set too high, there may be insufficient investor interest, leaving the underwriting company with unsold shares or the need to sell them at a reduced price, resulting in a financial loss.