3 ms·

> The other benefit of an IPO (to a trader looking for earliest exposure) is the stabilizing bid from the syndicate, a brief period of more legal market manipul

by hiq 4y ago

> The other benefit of an IPO (to a trader looking for earliest exposure) is the stabilizing bid from the syndicate, a brief period of more legal market manipulation where a consortium props up the price. Do you mean that you would have gotten the shares and would sell your shares at this point with a certain guarantee on the price, or something else?

yieldcrv 4y ago
In an IPO, the company sells a bunch of shares to banks, and this is a funding round for the company. The banks then immediately try to sell the shares at a slightly higher price to retail, and also collude and post a bunch of money on the buy side of the order books to give the illusion of demand. Psychologically this is commonly effective at getting retail to hop in front of these orders and purchase at higher prices and feel like they can sell at any time, leading them to be less discerning about what price they'll purchase at. And yes, they can sell directly into the stabilizing bid. It doesn't guarantee a price, thats too strong of a word for what this is. The bid can be removed at any time, the only thing exceptional is that the bid can be placed at all, as this would otherwise be sanctionable activity by the regulator or private litigants. https://www.investopedia.com/terms/s/stabilizingbid.asp#:~:text=A%20stabilizing%20bid%20is%20a,or%20be%20shaky%20in%20trading https://www.investopedia.com/terms/s/stabilizingbid.asp#:~:t....
- hackernewds 4y ago
  The participation of the banks is really spot on. And at peak mania you could see companies pop 100% on listing day despite having been bumped 100% the day prior to listing. The underwriting for the shares is a total farce, also shepherded by the same banks with insider holdings, and hence a conflict of interest to be honest with it.
  - yieldcrv 4y ago
    Yeah IPOs are a meticulous theatrical performance There is dilution in a “final” equity round, and then the banks are immediately flipping them to people that believe they are helping the company but are just getting dumped on by the banks, as all help was done by the banks I theoretically like direct listings more, but I don’t like retails tolerance of getting screwed in a different way because the valuations are unsupportable I just like exposure and liquidity, so float the shares one way or the other! People should be pragmatic about what they are participating in

by hiq 4y ago

yieldcrv 4y ago

In an IPO, the company sells a bunch of shares to banks, and this is a funding round for the company. The banks then immediately try to sell the shares at a slightly higher price to retail, and also collude and post a bunch of money on the buy side of the order books to give the illusion of demand. Psychologically this is commonly effective at getting retail to hop in front of these orders and purchase at higher prices and feel like they can sell at any time, leading them to be less discerning about what price they'll purchase at. And yes, they can sell directly into the stabilizing bid. It doesn't guarantee a price, thats too strong of a word for what this is. The bid can be removed at any time, the only thing exceptional is that the bid can be placed at all, as this would otherwise be sanctionable activity by the regulator or private litigants. https://www.investopedia.com/terms/s/stabilizingbid.asp#:~:text=A%20stabilizing%20bid%20is%20a,or%20be%20shaky%20in%20trading https://www.investopedia.com/terms/s/stabilizingbid.asp#:~:t....

hackernewds 4y ago
The participation of the banks is really spot on. And at peak mania you could see companies pop 100% on listing day despite having been bumped 100% the day prior to listing. The underwriting for the shares is a total farce, also shepherded by the same banks with insider holdings, and hence a conflict of interest to be honest with it.
- yieldcrv 4y ago
  Yeah IPOs are a meticulous theatrical performance There is dilution in a “final” equity round, and then the banks are immediately flipping them to people that believe they are helping the company but are just getting dumped on by the banks, as all help was done by the banks I theoretically like direct listings more, but I don’t like retails tolerance of getting screwed in a different way because the valuations are unsupportable I just like exposure and liquidity, so float the shares one way or the other! People should be pragmatic about what they are participating in