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Would it be fair to read his argument as saying that companies that exaggerate their prospects sell at higher IPO prices than companies that are more conservati
by nkurz 7y ago
Would it be fair to read his argument as saying that companies that exaggerate their prospects sell at higher IPO prices than companies that are more conservative in their marketing? Since the company's goal is to raise as much money as possible at the IPO while selling off as little of the company as possible, this would indicate that exaggeration is a good strategy, and one might predict that this trend of hyper-hyping is going to continue for a while. Sure, over the long term the company still needs to succeed, but if you are an pre-IPO investor who is holding for the long-term, as long as the IPO is successful, you'd probably prefer for the company to have more money in the bank over seeing a large post-IPO jump.
- cbanek 7y ago> companies that exaggerate their prospects sell at higher IPO prices If anything I think it's that they easily raise VC money, which then inflates the IPO price because people compare it against what VC's paid for it. WeWork VC value was about 4x what the IPO marked thought it might be worth. > raise as much money as possible at the IPO Seems more like the smart money is looking for dumb money to follow it, and a way to convert their VC held shares back into dollars via a liquidity event. But yes, a large post-IPO jump could be considered money left on the table, since people will pay for it, but the company didn't get it - the people buying at the IPO price then selling pocket that money.