The two major Chinese stock exchanges imposed a new trading rule with a price-move limit of 44% on the first trading day for IPOs after 2013. Following this quasi-natural experiment, market sentiment on IPOs drastically rises, resulting in extreme price run-up in initial trading days. Newly listed stocks under the trading rule experience greater illiquidity, higher turnover and volatility than earlier ones. Account-level data from the Shanghai Stock Exchange shows that following the new rule, net buyers of IPO change from institutional to retail investors. The evidence suggests that this price limit delays price discovery by arousing sentiment and crowding out informed investors.