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> the "perceived loss" from a day 1 IPO pop (not really how it works but it makes founders feel better)... Can you tell us more about this and why it's not the

> the "perceived loss" from a day 1 IPO pop (not really how it works but it makes founders feel better)... Can you tell us more about this and why it's not the loss people think?

WrtCdEvrydy 6y ago
It's hard to find the correct number. Price it too high and the news will report "Instagram opens -30% on their first day". Price it too low and you left money on the table. The best approach would be allowing people to place buy orders on market and then just liquidate as many as you can stock for when market opens but I'm not sure if this is exactly how this will go.
- dannyw 6y ago
  Who cares if "instagram opens -30% on their first day"? As a company, your objective should be raising the capital you need at the least dilution, not burning money for the sake of some articles that everyone will forget in one week. Who remembers what the pop or not was for <random ticker>? That's right, nobody.
  - mkinsella 6y ago
    Have you worked at a company that has gone public? It's a huge day for the company. Seeing the stock dip is a major morale killer, attributes to attrition, and can cause issues with hiring strong talent.
    - dannyw 6y ago
      This sounds like a communication / internal messaging issue, especially because the financial outcome (end of day share price) is the exact same.
      - reducesuffering 6y ago
        Seriously, how is this still going on when literal billions of $ on the line are being squandered to Wall St. every year in IPO's? Especially from tech co's where generally people should have a bit more critical thinking for the end result.
      - vasco 6y ago
        It's not the same, the company presumably still owns a lot of it's own stock post IPO, so a stronger share price will be way better for M&A for example, which is one of the many reasons a company may want to become publicly traded.
        ahepp 6y ago
        This seems to be assuming the share price ends up at the same place. It's simply a question of whether the IPO should be priced lower or higher.
        vasco 6y ago
        If you go by the efficient market hypothesis you would say that. I doubt that a universe where you open at $20 and rise by 100% gives you the same end state for all actors + price as a universe that opens at $200 and crashes by 80%. If you believe everything is priced in all the time I guess it makes sense.
        AmericanChopper 6y ago
        The efficient market hypothesis doesn’t predict that everything is priced in all the time. It predicts that you can’t consistently beat the efficiency of market pricing over a long term. It doesn’t predict that short term volatility can’t exist.
      - kgwgk 6y ago
        The end-of-next-day share price may not be exactly the same, though.
- bluecalm 6y ago
  Bookmakers run pre-market. There is a period where you can bet much lower than usual stakes. The bookie sees which side the money is piling on and adjusts the odds before opening the main market. This is the way to pay a premium for price discovery. Maybe something like that could be done with stocks.

> the "perceived loss" from a day 1 IPO pop (not really how it works but it makes founders feel better)... Can you tell us more about this and why it's not the loss people think?

WrtCdEvrydy 6y ago

It's hard to find the correct number. Price it too high and the news will report "Instagram opens -30% on their first day". Price it too low and you left money on the table. The best approach would be allowing people to place buy orders on market and then just liquidate as many as you can stock for when market opens but I'm not sure if this is exactly how this will go.

dannyw 6y ago
Who cares if "instagram opens -30% on their first day"? As a company, your objective should be raising the capital you need at the least dilution, not burning money for the sake of some articles that everyone will forget in one week. Who remembers what the pop or not was for <random ticker>? That's right, nobody.
- mkinsella 6y ago
  Have you worked at a company that has gone public? It's a huge day for the company. Seeing the stock dip is a major morale killer, attributes to attrition, and can cause issues with hiring strong talent.
  - dannyw 6y ago
    This sounds like a communication / internal messaging issue, especially because the financial outcome (end of day share price) is the exact same.
    - reducesuffering 6y ago
      Seriously, how is this still going on when literal billions of $ on the line are being squandered to Wall St. every year in IPO's? Especially from tech co's where generally people should have a bit more critical thinking for the end result.
    - vasco 6y ago
      It's not the same, the company presumably still owns a lot of it's own stock post IPO, so a stronger share price will be way better for M&A for example, which is one of the many reasons a company may want to become publicly traded.
      - ahepp 6y ago
        This seems to be assuming the share price ends up at the same place. It's simply a question of whether the IPO should be priced lower or higher.
        vasco 6y ago
        If you go by the efficient market hypothesis you would say that. I doubt that a universe where you open at $20 and rise by 100% gives you the same end state for all actors + price as a universe that opens at $200 and crashes by 80%. If you believe everything is priced in all the time I guess it makes sense.
        AmericanChopper 6y ago
        The efficient market hypothesis doesn’t predict that everything is priced in all the time. It predicts that you can’t consistently beat the efficiency of market pricing over a long term. It doesn’t predict that short term volatility can’t exist.
    - kgwgk 6y ago
      The end-of-next-day share price may not be exactly the same, though.
bluecalm 6y ago
Bookmakers run pre-market. There is a period where you can bet much lower than usual stakes. The bookie sees which side the money is piling on and adjusts the odds before opening the main market. This is the way to pay a premium for price discovery. Maybe something like that could be done with stocks.