It’s considered an over-valuation by investors and anyone who has ever worked in a sellside investment bank or on IPOs. The goal of the investment bank is to w

It’s considered an over-valuation by investors and anyone who has ever worked in a sellside investment bank or on IPOs. The goal of the investment bank is to work with the company to come up with a sensible valuation that will clear and pop on the IPO date. The bank has to take into account the market conditions and investor appetite when structuring the trade and setting the price. It is also why you hear of company’s pulling out of IPOs when market conditions are not favourable. I don’t follow your point exactly, if the value of the asset is relative to the context it presents itself, and the price you set for the IPO is not consistent with the said context, then you are incorrectly valuing the asset. The asset can be under or overvalued. For the record I have actually worked on IPOs at an investment bank structuring these kind of trades, so it’s not a pretense of knowledge on my part.