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If you don't need a large infusion of capital, this… is the whole point of an IPO. Who else is going to sell Facebook stock if not "insiders"?

by phillmv 14y ago

jpdoctor 14y ago
> Who else is going to sell Facebook stock if not "insiders" You don't understand the IPO process. Normally, it is a company with more opportunity than capital. So it creates additional shares and then sells it during the IPO. This process is just like raising capital with VCs, except the term sheet is effectively between the new investors and the company, with the SEC adding all sorts of post-its with additional conditions. Only since bubble v1 was it seen as some sort of "achievement" for a company; An IPO is nothing more than a poor company begging for money and willing to cause dilution in order to fill its tin cup.
- edj 14y ago
  >You don't understand the IPO process. >Normally, it is a company with more opportunity than capital. Although this was of course the original rational for IPOs, this looks more and more like a historical footnote these days. Now that so many IPOs are late-stage it's hard to see them as anything other than liquidity events for founders and investors and employees.
  - jpdoctor 14y ago
    There are two sides to the IPO: The seller and the buyer. Buyers who see "liquidity events for founders and investors and employees" as a valid reason for buying the IPO will continue buying until they don't, just like other bubbles.
- smackfu 14y ago
  The other way to look at is that these employees wanted to sell their shares, to lock in their gains and diversify. They could sell them as part of the IPO, or they could wait 6 months after the lock-out. They choose to sell immediately, which means the employees at least think it's a bubble.
  - adestefan 14y ago
    Or they're so sick of sitting on their shares all these years that they just want to get their money already. It's my money and I need it now!
    - jpdoctor 14y ago
      Look at it from the buyer side: Employees know what deals are on the table waiting to close, and new product announcements, and all sorts of things related to the stock. If they think the stock is going to double in the next 6 months, do you still think they'd sell? Even if they say "It's my money and I need it now!" brokers would be happy to offer a loan using the shares as collateral for any immediate money needs. If somebody is selling, they don't think the shares are about to double, plain and simple.
      - adestefan 14y ago
        You also don't have to sell all of your shares. I could cash out 25% now and keep 75% for when it doubles. Some times cash is king.
        jpdoctor 14y ago
        If cash is king, then 2x cash = 2x king. Again: If you know the stock is about to double, you go get a loan against the shares. Sellers do not believe this.
- phillmv 14y ago
  >Normally, it is a company with more opportunity than capital. Ahem. Like I said, >If you don't need a large infusion of capital,
hexagonal 14y ago
http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-person-threshold/ http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-... The reason lies on the technical shores of the federal securities laws. The Securities Exchange Act of 1934 sets forth certain requirements for companies to register their shares with the S.E.C. Specifically, Section 12(g) requires that a company register its securities with the S.E.C. if it “has total assets exceeding $1,000,000 and a class of equity security … held of record by five hundred or more … persons…” Facebook went public because they were forced to, not because they wanted to.
- bhb916 14y ago
  I didn't get that from the article, really. They could have registered with the S.E.C. without listing on a major exchange.

If you don't need a large infusion of capital, this… is the whole point of an IPO. Who else is going to sell Facebook stock if not "insiders"?

by phillmv 14y ago

If you don't need a large infusion of capital, this… is the whole point of an IPO. Who else is going to sell Facebook stock if not "insiders"?

jpdoctor 14y ago

> Who else is going to sell Facebook stock if not "insiders" You don't understand the IPO process. Normally, it is a company with more opportunity than capital. So it creates additional shares and then sells it during the IPO. This process is just like raising capital with VCs, except the term sheet is effectively between the new investors and the company, with the SEC adding all sorts of post-its with additional conditions. Only since bubble v1 was it seen as some sort of "achievement" for a company; An IPO is nothing more than a poor company begging for money and willing to cause dilution in order to fill its tin cup.

edj 14y ago
>You don't understand the IPO process. >Normally, it is a company with more opportunity than capital. Although this was of course the original rational for IPOs, this looks more and more like a historical footnote these days. Now that so many IPOs are late-stage it's hard to see them as anything other than liquidity events for founders and investors and employees.
- jpdoctor 14y ago
  There are two sides to the IPO: The seller and the buyer. Buyers who see "liquidity events for founders and investors and employees" as a valid reason for buying the IPO will continue buying until they don't, just like other bubbles.
smackfu 14y ago
The other way to look at is that these employees wanted to sell their shares, to lock in their gains and diversify. They could sell them as part of the IPO, or they could wait 6 months after the lock-out. They choose to sell immediately, which means the employees at least think it's a bubble.
- adestefan 14y ago
  Or they're so sick of sitting on their shares all these years that they just want to get their money already. It's my money and I need it now!
  - jpdoctor 14y ago
    Look at it from the buyer side: Employees know what deals are on the table waiting to close, and new product announcements, and all sorts of things related to the stock. If they think the stock is going to double in the next 6 months, do you still think they'd sell? Even if they say "It's my money and I need it now!" brokers would be happy to offer a loan using the shares as collateral for any immediate money needs. If somebody is selling, they don't think the shares are about to double, plain and simple.
    - adestefan 14y ago
      You also don't have to sell all of your shares. I could cash out 25% now and keep 75% for when it doubles. Some times cash is king.
      - jpdoctor 14y ago
        If cash is king, then 2x cash = 2x king. Again: If you know the stock is about to double, you go get a loan against the shares. Sellers do not believe this.
phillmv 14y ago
>Normally, it is a company with more opportunity than capital. Ahem. Like I said, >If you don't need a large infusion of capital,

hexagonal 14y ago

http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-person-threshold/ http://dealbook.nytimes.com/2011/01/03/facebook-and-the-500-... The reason lies on the technical shores of the federal securities laws. The Securities Exchange Act of 1934 sets forth certain requirements for companies to register their shares with the S.E.C. Specifically, Section 12(g) requires that a company register its securities with the S.E.C. if it “has total assets exceeding $1,000,000 and a class of equity security … held of record by five hundred or more … persons…” Facebook went public because they were forced to, not because they wanted to.

bhb916 14y ago
I didn't get that from the article, really. They could have registered with the S.E.C. without listing on a major exchange.