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Partly as a result, they massively underpriced Snapchat had underwriters and popped 50% on opening. Isn't that also massively underpriced? Life insurance and h
by acchow 10y ago
Partly as a result, they massively underpriced
Snapchat had underwriters and popped 50% on opening. Isn't that also massively underpriced? Life insurance and health insurance companies don't make the obscene margins and figures that investment banks do. Investment banks basically rob you silly when they underwrite. It's not insurance. It's clear that you will be underpricing if you want your IPO to be underwritten.
- easytiger 10y ago> Investment banks basically rob you silly when they underwrite The cost of taking risks can be very high. There are not inconsiderable likely downsides.
- WhitneyLand 10y agoThis is true and important to understand. However the point is that after considering this and all other value add, it's still vastly over priced, and is propagated by a happenstance of a few unhealthy market dynamics. Please, take a look at the link I posted above. Do you agree with how those fees are applied?
- acchow 10y agoI agree there are downsides. But IB profits on IPOs are excessive and not mild like you'd expect of an insurance company. Hijacking the term "underwriting" is a bit dishonest.