4 ms·

He didn't say anything about being surprised.

shapefrog 5y ago
No shock at all this is how the game works! You slap out a float, ideally small enough so that the supply and demand inbalance pushes the price up. So 3.7mil shares were issued at $102, and opened at $140, so that is a 'cost' to the company of $140 million + underwriting fees etc (probably another $30mil + the 700k shares they have options on at issue price). Additionally insiders dumped out 1.4mil shares at the issue price. Now execs + VC's have a 'liquid' market to sell or short against without paying the high costs for goldmans to price you up a private hedge which is the whole point of an IPO. Its litterally writting into the offering - 'The principal purposes of this offering are to increase our capitalization and financial flexibility and to create a public market for our Class A common stock.'
- ZephyrBlu 5y ago
  What I meant is that regardless of the financial situation of the company or whether shareholders still believe in it, don't you think insiders would be selling at IPO because it is probably the first major liquidity event ever? Even if you completely believe in the future of the company, locking in returns and getting some liquidity (Even if the stock didn't pop heaps) would be nice for people who have been illiquid for years.
  - shapefrog 5y ago
    And this is why the IPO market is broken. VC's are riding startups through multiple rounds of funding for way longer than before then dumping the late stage mature companies onto the public markets. Those that locked in their returns, recieved the proceeds of thier 1.4million shares of $142.8 million into their accounts just before the bell rang for the market open. The bell rang everyone cheered and the shares they just sold are worth $196 million. Regular joe with a robin hood account makes the money and the CEO/VC loses money ... who knows more about the company though? > Even if you completely believe in the future of the company, locking in returns and getting some liquidity Worth it if you get $10 a share instead of $100? All about value. Why not dump some out in the previous 8 funding rounds? The reason is not many VCs would be in there cashing out the guys from the previous rounds, or would only do so at a heavy discount or to gain control over the company.
ZephyrBlu 5y ago
You're right. The notion of "if they believe in the company so much why are they selling?" implied to me that it was unexpected for people to be selling their shares. That is what I meant by "surprised", though in hindsight my choice of wording was poor.

No shock at all this is how the game works! You slap out a float, ideally small enough so that the supply and demand inbalance pushes the price up. So 3.7mil shares were issued at $102, and opened at $140, so that is a 'cost' to the company of $140 million + underwriting fees etc (probably another $30mil + the 700k shares they have options on at issue price). Additionally insiders dumped out 1.4mil shares at the issue price. Now execs + VC's have a 'liquid' market to sell or short against without paying the high costs for goldmans to price you up a private hedge which is the whole point of an IPO. Its litterally writting into the offering - 'The principal purposes of this offering are to increase our capitalization and financial flexibility and to create a public market for our Class A common stock.'

ZephyrBlu 5y ago
What I meant is that regardless of the financial situation of the company or whether shareholders still believe in it, don't you think insiders would be selling at IPO because it is probably the first major liquidity event ever? Even if you completely believe in the future of the company, locking in returns and getting some liquidity (Even if the stock didn't pop heaps) would be nice for people who have been illiquid for years.
- shapefrog 5y ago
  And this is why the IPO market is broken. VC's are riding startups through multiple rounds of funding for way longer than before then dumping the late stage mature companies onto the public markets. Those that locked in their returns, recieved the proceeds of thier 1.4million shares of $142.8 million into their accounts just before the bell rang for the market open. The bell rang everyone cheered and the shares they just sold are worth $196 million. Regular joe with a robin hood account makes the money and the CEO/VC loses money ... who knows more about the company though? > Even if you completely believe in the future of the company, locking in returns and getting some liquidity Worth it if you get $10 a share instead of $100? All about value. Why not dump some out in the previous 8 funding rounds? The reason is not many VCs would be in there cashing out the guys from the previous rounds, or would only do so at a heavy discount or to gain control over the company.

ZephyrBlu 5y ago

You're right. The notion of "if they believe in the company so much why are they selling?" implied to me that it was unexpected for people to be selling their shares. That is what I meant by "surprised", though in hindsight my choice of wording was poor.