4 ms·

These proposals are just advertising for the firms trying to win the IPO deal as they try to one-up each other to predict the largest valuations. It's basically

These proposals are just advertising for the firms trying to win the IPO deal as they try to one-up each other to predict the largest valuations. It's basically meaningless.

deleted 8y ago
[deleted]
ProfessorLayton 8y ago
If I understand IPOs correctly, I don't think that's true. Underwriting firms are left holding the bag if they overprice a stock, so it is not in their interest to overvalue it during an IPO. Further, if the price is too high, they'll cool down enthusiasm for the stock, and depress the price.
- huac 8y ago
  this is just a proposal, the firms can walk the number down later, it's in their favor to put up a high number so that they get free advertising (like this) and a better chance at winning the IPO mandate
- iaw 8y ago
  In theory that's how it should work if there was internal firewalls. In reality the brokers at the investment banks will shill the IPO to their undesirable clients as a way to get it off the books, or at least that's what they usually do.
- Lazare 8y ago
  I think you understand IPOs correctly, but you missed the bit where this isn't an IPO. This is the bit where some firms say "hey, at some point in the future you should totally sell yourself through us, we think you're very likely totally probably worth a zillion dollars". And then at some point in the future Uber will actually do an IPO with one of these banks, and the underwriters will price the stock at whatever level they're confident they can clear the shares, and it will be a lot less than $120 billion, and Uber will say "what happened, you said you thought we were worth a zillion dollars!", and the banks will cough and shuffle their feet, and tell some white lies, and blame the economic cycles and sunspots and the lack of vision of the institutional investors who bought the bulk of the shares. But the reality is, nobody thinks Uber is worth $120B, and nobody (least of all Uber) should take the headline as suggesting that someone does. The $120B number is meaningless, it's just flattery to try and convince Uber to go with them for the IPO, where actual numbers will have to be pulled out of a hat.
- spork12 8y ago
  Very much the opposite. Firms will overprice a stock hold it up for a few weeks by creating an area of support (buying) and then dump the shares to joe six pack until they don't need to prop it up.

These proposals are just advertising for the firms trying to win the IPO deal as they try to one-up each other to predict the largest valuations. It's basically meaningless.

deleted 8y ago

[deleted]

ProfessorLayton 8y ago

If I understand IPOs correctly, I don't think that's true. Underwriting firms are left holding the bag if they overprice a stock, so it is not in their interest to overvalue it during an IPO. Further, if the price is too high, they'll cool down enthusiasm for the stock, and depress the price.

huac 8y ago
this is just a proposal, the firms can walk the number down later, it's in their favor to put up a high number so that they get free advertising (like this) and a better chance at winning the IPO mandate
iaw 8y ago
In theory that's how it should work if there was internal firewalls. In reality the brokers at the investment banks will shill the IPO to their undesirable clients as a way to get it off the books, or at least that's what they usually do.
Lazare 8y ago
I think you understand IPOs correctly, but you missed the bit where this isn't an IPO. This is the bit where some firms say "hey, at some point in the future you should totally sell yourself through us, we think you're very likely totally probably worth a zillion dollars". And then at some point in the future Uber will actually do an IPO with one of these banks, and the underwriters will price the stock at whatever level they're confident they can clear the shares, and it will be a lot less than $120 billion, and Uber will say "what happened, you said you thought we were worth a zillion dollars!", and the banks will cough and shuffle their feet, and tell some white lies, and blame the economic cycles and sunspots and the lack of vision of the institutional investors who bought the bulk of the shares. But the reality is, nobody thinks Uber is worth $120B, and nobody (least of all Uber) should take the headline as suggesting that someone does. The $120B number is meaningless, it's just flattery to try and convince Uber to go with them for the IPO, where actual numbers will have to be pulled out of a hat.
spork12 8y ago
Very much the opposite. Firms will overprice a stock hold it up for a few weeks by creating an area of support (buying) and then dump the shares to joe six pack until they don't need to prop it up.