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Microsoft closed up ~60% on the first day. At the peak on the first day is was up more than that (~80% IIRC). Microsoft did no different to LinkedIn, Gates act

by nikcub 15y ago

Microsoft closed up ~60% on the first day. At the peak on the first day is was up more than that (~80% IIRC). Microsoft did no different to LinkedIn, Gates actually wanted to price the stock lower to assure that a liquid market would be created. They re-priced the listing late in the process, just like LinkedIn did. Most of the Microsoft negotiation with Goldman was about commission charges. This was all the same thing, both hot stocks who could dictate a lot of their own terms. The only difference is that we got a good insight into the Microsoft process via that Fortune article and the only insight we got into LinkedIn were press releases (most announcing another tilt up in the price) See my last comment about how list pricing works and why nobody got 'ripped off': http://news.ycombinator.com/item?id=2571248 http://news.ycombinator.com/item?id=2571248

nostromo 15y ago
I'm not a finance guy </disclaimer> I think the closing price of the first day is irrelevant, my understanding is that the opening price is the issue. LNKD started trading above $80 a share, while the bankers priced the shares at $45 -- a huge delta that means that their customers realized a large windfall instantaneously and LNKD could have raised nearly twice the capital at the same dilution. Compare that to MSFT, which was sold by the company at $21 while the first trade was $25.50 (http://blog.seattlepi.com/microsoft/2006/03/16/looking-back-microsoft-ipo-march-1986/ http://blog.seattlepi.com/microsoft/2006/03/16/looking-back-...) -- a much smaller gap. Once it's on the open market, anything can happen. The issue at hand is if the bankers low-balled LNKD in order to guarantee huge returns for their institutional customers, short-changing the company. A note to all not-yet-public companies: the banks are not on your side.
dstein64 15y ago
According to the numbers on eHow, the first day arithmetic returns (relative to IPO price, not the opening trade price) were, at close: (27.75-21) / 21 = 32.1%, and at day's peak: (29.25-21) / 21 = 39.3% The prices I used are from a site on eHow: http://www.ehow.com/about_5077008_microsoft-stock-split-history.html http://www.ehow.com/about_5077008_microsoft-stock-split-hist...

by nikcub 15y ago

nostromo 15y ago

I'm not a finance guy </disclaimer> I think the closing price of the first day is irrelevant, my understanding is that the opening price is the issue. LNKD started trading above $80 a share, while the bankers priced the shares at $45 -- a huge delta that means that their customers realized a large windfall instantaneously and LNKD could have raised nearly twice the capital at the same dilution. Compare that to MSFT, which was sold by the company at $21 while the first trade was $25.50 (http://blog.seattlepi.com/microsoft/2006/03/16/looking-back-microsoft-ipo-march-1986/ http://blog.seattlepi.com/microsoft/2006/03/16/looking-back-...) -- a much smaller gap. Once it's on the open market, anything can happen. The issue at hand is if the bankers low-balled LNKD in order to guarantee huge returns for their institutional customers, short-changing the company. A note to all not-yet-public companies: the banks are not on your side.

dstein64 15y ago

According to the numbers on eHow, the first day arithmetic returns (relative to IPO price, not the opening trade price) were, at close: (27.75-21) / 21 = 32.1%, and at day's peak: (29.25-21) / 21 = 39.3% The prices I used are from a site on eHow: http://www.ehow.com/about_5077008_microsoft-stock-split-history.html http://www.ehow.com/about_5077008_microsoft-stock-split-hist...