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Not with a direct listing. Coinbase shares would be subject to an auction and the market for them will open at the price where supply meets demand.
by harryh 6y ago
Not with a direct listing.
Coinbase shares would be subject to an auction and the market for them will open at the price where supply meets demand.
- bluedevil2k 6y agoNot entirely true - since people had to enter a single point on their demand curve as a price and quantity of shares (instead of their entire demand curve) the market clearing price was artificially low. Hence the price pop on day one. To think about it more in depth - assume I enter a bid of 100 shares at $100. If the market clearing price is $50, I’ll be awarded 100 shares at $50. However, I was willing to buy far more than that at a higher price, so I’d go buy more shares on the open market, driving the price up.
- deleted 6y ago[deleted]
- kortilla 6y agoBut the point is that everyone with a bid >=$50 got filled.
- solveit 6y agoIf I am willing to buy 100 shares at $100, I may be willing to buy 300 shares at $60. So just because my bid got filled doesn't mean I won't be buying more.
- harryh 6y agoIf you're willing to buy 300 shares at 60, but only 100 shares at $100 you can enter two bids: 100 shares at $100 200 shares at $60 This will satisfy your demand position.
- cbhl 6y agoIf the person has only 18000 though (300 at 60) then if they put in 100 at $100, they'll only be able to buy 133 at 60. I would still enter two bids; it's just a matter of adjusting how many at each level.
- harryh 6y agoNo, this is not how it works. All the shares in the auction are sold at the same price. If the market clears at 60, a person entering the bids I described would buy 300 shares at 60.
- cbhl 6y agoI apologize if I misunderstood. Isn't this a direct listing? At what point do retail investors get to participate in an auction?
- harryh 6y agoRetail investors (and any other investors) submit orders before the new security begins to trade. The first thing that happens on open is an auction.
- dalbasal 6y agothanks. concise.
- lmm 6y agoYou can issue your whole curve as orders, can't you? Something like: buy 50 shares limit $200 on open, buy 50 shares limit $100 on open, buy 100 shares limit $50 on open.
- bluedevil2k 6y agoThere’s only buy orders in these auctions: buy X shares at Y price.
- lmm 6y agoThe limit is the price. With the "at open" I was thinking about direct listings where you'd need some way to prevent your order being filled after the opening auction (and potentially at a different price), but with an IPO that's not an issue at all. So you should definitely be able to just put your whole curve in.
- Tinyyy 6y agoThis is complete bullshit, you can enter your entire demand curve into the market with various bids.
- bluedevil2k 6y agoNo, you’re wrong. You’re not taking a bidders budget into account. If I enter 20 points on my demand curve ans they’re all above the clearing price, I’ll end up being forced to buy the quantities of all my bids. That may totally bust my budget. There are no stop limit orders in these auctions...there’s only a buy order with a quantity and a price.
- harryh 6y agoIf you are willing to by 100 shares at $100 or, say, 200 shares at $50 you can enter the following two bids: 100 shares at $100 100 shares at $50 This will satisfy your demand curve. In a direct listing, the initially listed shares will all transact at the same price (the clearing price).
- bluedevil2k 6y agoThat’s a contrived example though. Say you put 200 shares at $50. If the clearing price is $50, you’ve won 300 shares at $50 - $15,000 total. What if you only have $10,000? I’m saying it’s difficult to a) allow bidders to enter a demand curve b) respect their budget limitations c) keep it easily understandable for bidders.
- deleted 6y ago[deleted]
- harryh 6y agoWhy would you put 200 shares at $50 and 100 shares at $100 if you only had a $10,000 budget? That's misrepresenting your actual demand curve. Are you saying that an auction of this kind is a bit complicated, and it's possible to make a mistake? I suppose that might be true, but that is a very different assertion from your original position: "since people had to enter a single point on their demand curve as a price and quantity of shares (instead of their entire demand curve)"
- throw4893043 6y agoInstitutional investors still win the day here, because Coinbase opened a private secondary market for them this week to buy shares ahead of the IPO.
- hdespiritu 6y agoYeah, good catch https://decrypt.co/55136/coinbase-to-launch-secondary-market-for-private-stock-reports https://decrypt.co/55136/coinbase-to-launch-secondary-market...
- themihai 6y agoHow naive you are...the market is rigged against you. Few big boys own(literally)the market. Some crazy retailers tried to switch the places but as we've seen yesterday it's hard to stand up to all of them billionaires, brokers, market makers, hedge funds, billionaires owning brokers and clearing houses as well working against you.