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My impression is their fees are closer to 50%: Somehow, only close friends of the investment banks are allowed to buy shares at the listing price, the rest of u
by drcode 6y ago
My impression is their fees are closer to 50%: Somehow, only close friends of the investment banks are allowed to buy shares at the listing price, the rest of us have to wait until after the 2x price pop in the markets... at least that's what has been happening in most recent IPOs.
- smabie 6y agowhy do owners of pre-IPO shares care? When people talk about investment banks ripping companies with regards to the IPOs, they're not talking about the public. Moreover, most retail investors aren't going to participate in the pre-market auction in the first place, so the results will be the same
- drcode 6y agoThere shouldn't be a pre-ipo auction, the stock market should be the auction. That's what the SEC is enabling here. This is good for the companies and good for the retail investors, bad for the middlemen.
- rocqua 6y agoIf a company has 1000 shares outstanding, and 2000$ in assets, and it sells another 1000 shares for 1$ a pop, then the owners of pre-IPO shares get diluted. Before this, they had a share of 2$ worth of assets. Now they have a share of 1.5$ worth of assets. Or, from another point of view. If you own shares in a company, you want that company to do well. Having the company raise more money (for the same dilution) is going to help the company do well. Or, from yet another point of view, all these new shareholders are going to be taking a share of your dividend. You'd like the company to be able to use the new assets to grow quickly so they can pay out more dividend in total. My point is, shareholders have reason to care about more than just the share price of a company.