4 ms·

Facebook: "going IPO!"

12 points by dawie 19y ago

palish 19y ago
Interesting.. I wonder how it will turn out.
- create_account 19y ago
  Unless they're really generating tons of revenue, going public might be a rough road. Sure the founders and investors get to cash out, but Wall Street checks in every three months, and can be unforgiving if you fail to meet expectations. Remember that the Google guys didn't want to go public.
  - deleted 19y ago
    [deleted]
far33d 19y ago
I'm buying, unless they drastically under-price the offering.
- wmorein 19y ago
  Underprice? Buy high, sell low? :)
  - far33d 19y ago
    If they underprice the offering, the price will go up a LOT during public trading on the first day, hence, high actual price for everyday investors and a big payout for the IBankers. So what I'm saying is, if I can get in at a reasonable valuation, I'm in. If not, I might wait it out til the hype wears down a bit.
    - deleted 19y ago
      [deleted]
    - wmorein 19y ago
      OK, I see what you mean now -- I assumed this was a typo. I'm still not sure that I agree. I don't think that recent history has shown that the opening price (i.e. the first price at which the public can buy shares) is any higher if the ibankers significantly underprice the stock. In essence, all that should matter to you is that opening price. If it is too high, then you shouldn't buy. If the stock is underpriced, then it is true that there will be less capital that goes into the business so the valuation you use to decide whether to make the investment would have to take that into account. Given the way that I'm guessing that Facebook will be valued, I have to think that any possible loss due to underpricing will be vanishingly small compared to the overall market cap of the company. I can understand a philosophical reason not to invest if it is underpriced, but not a real economic one. One other note -- if the IPO is underpriced, the payout goes not directly to the ibankers but rather to the people that get allocations. These are usually big customers like hedge funds or other people with an "in" with the ibankers (e.g. execs of other companies that might go public, although this stuff has slowed down). Obviously the expectation is that these people will benefit the bankers in the long run, but the payment is not direct.
    - byrneseyeview 19y ago
      'If they underprice the offering, the price will go up a LOT during public trading on the first day, hence, high actual price for everyday investors and a big payout for the IBankers." False. Investment Bankers get paid a percentage of the offering price. If the price is lower, they make less money.
      - far33d 19y ago
        Their cronies (and often the bankers themselves) take large amounts of the IPO shares.
        byrneseyeview 19y ago
        So when you refer to 'ibankers' as a group, you mean 'ibankers who steal from their employers'? Isn't this a distinction you ought to make? And doesn't your previous statement make sense if you were merely uninformed?

12 points by dawie 19y ago

palish 19y ago

Interesting.. I wonder how it will turn out.

create_account 19y ago
Unless they're really generating tons of revenue, going public might be a rough road. Sure the founders and investors get to cash out, but Wall Street checks in every three months, and can be unforgiving if you fail to meet expectations. Remember that the Google guys didn't want to go public.
- deleted 19y ago
  [deleted]

far33d 19y ago

I'm buying, unless they drastically under-price the offering.

wmorein 19y ago
Underprice? Buy high, sell low? :)
- far33d 19y ago
  If they underprice the offering, the price will go up a LOT during public trading on the first day, hence, high actual price for everyday investors and a big payout for the IBankers. So what I'm saying is, if I can get in at a reasonable valuation, I'm in. If not, I might wait it out til the hype wears down a bit.
  - deleted 19y ago
    [deleted]
  - wmorein 19y ago
    OK, I see what you mean now -- I assumed this was a typo. I'm still not sure that I agree. I don't think that recent history has shown that the opening price (i.e. the first price at which the public can buy shares) is any higher if the ibankers significantly underprice the stock. In essence, all that should matter to you is that opening price. If it is too high, then you shouldn't buy. If the stock is underpriced, then it is true that there will be less capital that goes into the business so the valuation you use to decide whether to make the investment would have to take that into account. Given the way that I'm guessing that Facebook will be valued, I have to think that any possible loss due to underpricing will be vanishingly small compared to the overall market cap of the company. I can understand a philosophical reason not to invest if it is underpriced, but not a real economic one. One other note -- if the IPO is underpriced, the payout goes not directly to the ibankers but rather to the people that get allocations. These are usually big customers like hedge funds or other people with an "in" with the ibankers (e.g. execs of other companies that might go public, although this stuff has slowed down). Obviously the expectation is that these people will benefit the bankers in the long run, but the payment is not direct.
  - byrneseyeview 19y ago
    'If they underprice the offering, the price will go up a LOT during public trading on the first day, hence, high actual price for everyday investors and a big payout for the IBankers." False. Investment Bankers get paid a percentage of the offering price. If the price is lower, they make less money.
    - far33d 19y ago
      Their cronies (and often the bankers themselves) take large amounts of the IPO shares.
      - byrneseyeview 19y ago
        So when you refer to 'ibankers' as a group, you mean 'ibankers who steal from their employers'? Isn't this a distinction you ought to make? And doesn't your previous statement make sense if you were merely uninformed?