Stock sold just prior to an IPO at prices "substantially" below the IPO price. A "substantially" lower price is normally deemed to be 85 percent or less of the IPO offering price.

a stock that will go down as soon as you decide not to short it

When insiders have invested in the company within three years before the public offering, the amount they paid will be compared with the offering price to the public. A big difference raises the cheap shares issue, which must be dealt with satisfactorily for the public offering to be cleared through SEC and state blue sky laws. A NASAA Statement of Policy defines "cheap stock" and provides for their escrow as a condition to qualify the public offering in some states. While in escrow the shares cannot be traded. Release from escrow is typically conditioned upon meeting a three-year earnings-per-share test equal to 5 percent of the public offering price, a three-month period of trading at 175 percent of the offering price, or six to nine years after the offering.