The amount of shares on offer is typically only a fraction of all outstanding shares. So underpricing the IPO shares isn't such a huge deal if company insiders

The amount of shares on offer is typically only a fraction of all outstanding shares. So underpricing the IPO shares isn't such a huge deal if company insiders who are under sales lockups hold many times more shares. It might actually be beneficial to company execs if they wish to offload their stock after escrow ends.