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I've really never liked the way the financial press writes about IPOs. The success of an IPO process should be judged on the degree to which the underwriters w
by DevX101 7y ago
I've really never liked the way the financial press writes about IPOs. The success of an IPO process should be judged on the degree to which the underwriters were able to accurately price the stock.
The best IPO in my mind is one in which the price doesn't change at all on IPO day. That is, both the company and the IPO investors agreed on a fair valuation for the company and they were both right.
Zoom's stock which shot up 70% in my mind was a horrible IPO. Either the underwriters undervalued the company, or the investors are paying too much for an asset that's worth less.
Seen in this context, User's 7.6% drop on IPO day is not bad, and better than most.
- c256 7y agoI see what you’re going for, but do you really think anyone’s goal was to price the stock so that the price stayed flat? In the one IPO that I saw from the inside (early in the internet bubble days), the financial people seemed to be debating what sort of first-day growth they were after, and I don’t recall anyone suggesting targets like that. Maybe strategies have changed since then?
- rossdavidh 7y agoWell, that 7.6% drop was after they dropped their target well below what had been expected earlier. So perhaps they semi-accurately gauged the market price for their stock, but that means lots of people had been way too optimistic about it previously. Also, the fact that the IPO did not provide a big profit for the initial buyers (not quickly, anyway), and you could get a better price by purchasing it on day two than by being in on the IPO, certainly has the potential to impact IPO's coming up.