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This won't just kill their ability to get future offerings subscribed, but also can weigh heavily on the trading of the stock long term which could easily get i
by michaelochurch 15y ago
This won't just kill their ability to get future offerings subscribed, but also can weigh heavily on the trading of the stock long term which could easily get in the way of any secondary offerings.
Wrong. Underpriced IPOs (almost all of them) have been welfare for well-connected friends-of-investment-wankers for quite some time. The idea that banks would have trouble allocating public offerings is laughable.
The claim that banks need to underprice IPOs for some systemic reason is laughable. It's a back-filling rationalization for spinning, which would otherwise rightly have bankers in federal PMITA prison.
- trotsky 15y agoI'm not going to disagree with you that there are bad things that go on with IPO allocations. But I think you misunderstand - I'm not saying investment banks are required to underprice IPO's to get them fully subscribed, but clearly they need to avoid over pricing the shares if they expect to keep selling them. I think you have a fundamental misunderstanding of the process if you believe that Morgan could consistently over price new offerings and subsequently see them fail/go under water and yet still be able to keep selling these over priced issuances to their clients and institutions.
- michaelochurch 15y agoI think they should fairly price the IPO, not overprice it.
- RickHull 15y agoYou are looking at the market price today. Morgan Stanley's consideration is the market price in the future. I believe the market price today is overvalued, and it will come down in the future.
- deleted 15y ago[deleted]