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This reminds me of what Google tried[1] (with limited success[2]) to do with their IPO. During the Dot-com Boom, allocations of shares in hot IPOs were highly

This reminds me of what Google tried[1] (with limited success[2]) to do with their IPO. During the Dot-com Boom, allocations of shares in hot IPOs were highly sought after, as investment banks seemed to consistently price the offerings to guarantee a pop in first-day trading, and award allocations to their favoured clients. Effectively, the investment banks were under-pricing the shares such that the company going public "left money on the table", which got picked up (at relatively low risk) by the i-banks' preferred clients. Companies seem to have grown wise to this and started putting more pressure on the i-banks to ensure they don't end up leaving money on the table (c.f. Facebook, Pure Storage). Therefore, the i-banks' favoured clients are less interested in taking IPO allocations, so the i-banks need to widen the net to find more investor demand. 1: http://www.wsj.com/articles/SB108328345314098183 http://www.wsj.com/articles/SB108328345314098183 2: http://www.cnbc.com/2014/08/19/es-took-off-but-the-auction-didnt.html http://www.cnbc.com/2014/08/19/es-took-off-but-the-auction-d...

sjg007 11y ago
True. Funny thing that may or may not be a motivating factor. Except for Google and Facebook, a lot of recent IPOs are trading below their offer price. Maybe the bigger I-bank clients recognize this (even mutual funds) so they are buying at the pre-IPO in late financing rounds. However, they still need someone to buy at the IPO, and who better than Joe Public?
- ksherlock 11y ago
  The Google and FaceBook IPOs were considered a failure (by conventional wisdom standards). Of course, the money went to them and not the wall street bankers.
  - sjg007 11y ago
    If the IPO holders had held on they would've made bank.
  - tromobne8vb 11y ago
    This always cracks me up. In reality they got the price correct and maximized the money that the company got for doing the IPO in the first place. The problem is that there is an expectation that IPO stocks will 'pop' and allow wall street to line their own pockets. Since they didn't, they consider it a failure.
meatysnapper 11y ago
This on the heels of unicorns having trouble in getting a bigger next round... scary times. I think the party may be over soon.

sjg007 11y ago

True. Funny thing that may or may not be a motivating factor. Except for Google and Facebook, a lot of recent IPOs are trading below their offer price. Maybe the bigger I-bank clients recognize this (even mutual funds) so they are buying at the pre-IPO in late financing rounds. However, they still need someone to buy at the IPO, and who better than Joe Public?

ksherlock 11y ago
The Google and FaceBook IPOs were considered a failure (by conventional wisdom standards). Of course, the money went to them and not the wall street bankers.
- sjg007 11y ago
  If the IPO holders had held on they would've made bank.
- tromobne8vb 11y ago
  This always cracks me up. In reality they got the price correct and maximized the money that the company got for doing the IPO in the first place. The problem is that there is an expectation that IPO stocks will 'pop' and allow wall street to line their own pockets. Since they didn't, they consider it a failure.

meatysnapper 11y ago

This on the heels of unicorns having trouble in getting a bigger next round... scary times. I think the party may be over soon.