4 ms·
1) They try to be a shade conservative when pricing for IPO because the stock going down on day 1 is a very bad. 2) The underwriters are invented to keep it lo
by edblarney 10y ago
1) They try to be a shade conservative when pricing for IPO because the stock going down on day 1 is a very bad.
2) The underwriters are invented to keep it low because they basically keep the upside - i.e. they buy from Snap at the low price and will sell the next day on the pop.
3) It's volatile because there's little basis for the valuation - they're making almost no money and have a massive, massive valuation = it's hard to establish what they are worth = more variation.
4) Retail investor hype. Every dentist, doctor and retired guy wants a piece to feel like they are 'getting part of the IPO' and there's irrational exuberance which pushes the prices around.