5 ms·

So they basically left money on the table?

by pkaye 11y ago

deleted 11y ago
[deleted]
chimeracoder 11y ago
These days, you "have to" leave money on the table, or your IPO is deemed a "failure" (see: Facebook).
- joeblau 11y ago
  I was going to ask the same question. This seems like a valid reasoning for why. Facebook seems to have rebounded from that event pretty well with its stock price over $100 right now.
- maxerickson 11y ago
  I think that isn't fair to IPOs other than Facebook. Facebook was unusual in having the leverage to snub the banks and price strong.
- uptown 11y ago
  What would you rather have ... less money but CNBC and the internet calling you a huge success, or more capital available to run your business but CNBC and today's internet echo chamber calling you a failure. I'd choose the latter.
- vessenes 11y ago
  Facebook had serious, serious trading problems day one that resulted in a class action lawsuit involving NASDAQ. While it was priced strongly, I don't think it's fair to say it wouldn't have popped without the trading problems. We don't know. It was on its way up when trades started to back up and people freaked out.
hobo_mark 11y ago
Basically yes, you are selling for X something that the market is willing to buy at 1.6X, however someone must have made a lot of money on that spread today.
- joopxiv 11y ago
  Basically no. If you want to sell for example 100 shares, you need to find a price that you have enough buyers to sell them, in this case they decided on $9. If afterwards there are 5 buyers that want to pay $14 for a share, then the price will go up to $14 based on these 5 shares that are traded. But this absolutely does not mean that you would have found enough buyers for all 100 shares if you initially priced them at $14.
  - hobo_mark 11y ago
    Good point.
roymurdock 11y ago
Not unusual for highly hyped IPOs to "pop". Underwriters and the first tier of investors like to structure IPO pricing this way so they get a guaranteed exit on the initial craze to buy and beat out subsequent buyers. Facebook IPO'd at $38, popped up to $45, closed at $38 on the first day, then plummeted down to $27 a week after the IPO. Now its at $107. Anything can happen.
jjb123 11y ago
I actually don't know the answer to this - but is the situation as straightforward as: "they left money on the table today, but it's in the effort to improve perception and health of the company - and they will be able to sell more down the road with the boost of momentum and health of the stock performance from IPO. At that point, they can capture the value created by an event like today (where they purposefully leave some money on the table) for the move to be net-net positive?
steven2012 11y ago
Yes. The investment bankers and mutual fund companies fucked Square for $100M. The difference between this and other IPOs is that Square is undercapitalized at this point and needs the cash, so the 100M would have gone a long way.
ju-st 11y ago
My impression is that the media event of an IPO is higher valued than the money
prostoalex 11y ago
Don't forget that the first day is reserved for enthusiasts and people highly engaged in speculation with the hopes to get on the "ground floor" of something big. Small float, everybody who matters is still under lock-up. Here's another IPO that went up 56% the first day http://techcrunch.com/2014/12/11/lending-clubs-ipo-pops-56-in-its-first-day-sets-stage-for-hortonworks-and-new-relic-offerings/ http://techcrunch.com/2014/12/11/lending-clubs-ipo-pops-56-i... and Google Finance tells a rather somber "where are they now" story.

So they basically left money on the table?

by pkaye 11y ago

So they basically left money on the table?

deleted 11y ago

[deleted]

chimeracoder 11y ago

These days, you "have to" leave money on the table, or your IPO is deemed a "failure" (see: Facebook).

joeblau 11y ago
I was going to ask the same question. This seems like a valid reasoning for why. Facebook seems to have rebounded from that event pretty well with its stock price over $100 right now.
maxerickson 11y ago
I think that isn't fair to IPOs other than Facebook. Facebook was unusual in having the leverage to snub the banks and price strong.
uptown 11y ago
What would you rather have ... less money but CNBC and the internet calling you a huge success, or more capital available to run your business but CNBC and today's internet echo chamber calling you a failure. I'd choose the latter.
vessenes 11y ago
Facebook had serious, serious trading problems day one that resulted in a class action lawsuit involving NASDAQ. While it was priced strongly, I don't think it's fair to say it wouldn't have popped without the trading problems. We don't know. It was on its way up when trades started to back up and people freaked out.

hobo_mark 11y ago

Basically yes, you are selling for X something that the market is willing to buy at 1.6X, however someone must have made a lot of money on that spread today.

joopxiv 11y ago
Basically no. If you want to sell for example 100 shares, you need to find a price that you have enough buyers to sell them, in this case they decided on $9. If afterwards there are 5 buyers that want to pay $14 for a share, then the price will go up to $14 based on these 5 shares that are traded. But this absolutely does not mean that you would have found enough buyers for all 100 shares if you initially priced them at $14.
- hobo_mark 11y ago
  Good point.

roymurdock 11y ago

Not unusual for highly hyped IPOs to "pop". Underwriters and the first tier of investors like to structure IPO pricing this way so they get a guaranteed exit on the initial craze to buy and beat out subsequent buyers. Facebook IPO'd at $38, popped up to $45, closed at $38 on the first day, then plummeted down to $27 a week after the IPO. Now its at $107. Anything can happen.

jjb123 11y ago

I actually don't know the answer to this - but is the situation as straightforward as: "they left money on the table today, but it's in the effort to improve perception and health of the company - and they will be able to sell more down the road with the boost of momentum and health of the stock performance from IPO. At that point, they can capture the value created by an event like today (where they purposefully leave some money on the table) for the move to be net-net positive?

steven2012 11y ago

Yes. The investment bankers and mutual fund companies fucked Square for $100M. The difference between this and other IPOs is that Square is undercapitalized at this point and needs the cash, so the 100M would have gone a long way.

ju-st 11y ago

My impression is that the media event of an IPO is higher valued than the money

prostoalex 11y ago

Don't forget that the first day is reserved for enthusiasts and people highly engaged in speculation with the hopes to get on the "ground floor" of something big. Small float, everybody who matters is still under lock-up. Here's another IPO that went up 56% the first day http://techcrunch.com/2014/12/11/lending-clubs-ipo-pops-56-in-its-first-day-sets-stage-for-hortonworks-and-new-relic-offerings/ http://techcrunch.com/2014/12/11/lending-clubs-ipo-pops-56-i... and Google Finance tells a rather somber "where are they now" story.