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A $45 market price after a $26 IPO means Twitter left over $1B on the table, doesn't it? They would've had that money, instead of the first investors who can no

A $45 market price after a $26 IPO means Twitter left over $1B on the table, doesn't it? They would've had that money, instead of the first investors who can now immediately sell the shares at a huge profit, if the initial price was set closer to what the market would've paid.

kmfrk 13y ago
I can't do the numbers on what they missed out on, but it's definitely money Twitter won't see, yes.
deleted 13y ago
[deleted]
Nicholas_C 13y ago
Approximately $11B According to my quick calculations. TWTR market cap is at $25B currently. They sold 544.7M shares for $26, ~$14B in all. That leaves an $11B difference.
Osiris 13y ago
A question: In an IPO, does the company have to sell every share for the same price? As in a typical market, the price fluctuates based on demand. Couldn't they evaluate the demand for the shares and adjust their sell price higher to compensate, or is it part of the legal framework that they are required to sell all the shares at exactly the same price?
- mmahemoff 13y ago
  Google tried to pioneer a Dutch auction IPO when they went public in 2004. Buyers would make bids for an amount of stock, and somewhat bypassing the banks, but it was less than successful. The idea has never taken off, not yet anyway. It seems the banks still play an important role in marshalling large funds, and there's apparently significant benefit from a "hot" stock gaining on day 1 (albeit irrational).
  - the_watcher 13y ago
    I thought that it was mainly successful for Google, but that it was Google being such an insanely in demand stock that led to the success, not the auction itself. Basically, a Google IPO couldn't really fail. I do know that the banks hated it, and the only reason Google got away with it is because Larry and Sergey couldn't have cared less.
    - mmahemoff 13y ago
      A Google IPO was always going to do well, which is part of the reason they felt they could take a gamble like that. But the stock doubled in 60 days [1], so "eBay for IPOs" didn't create anything like a perfect supply-demand scenario. Maybe it would be different now. 1. http://www.marketwatch.com/story/google-ipo-has-doubled-after-60-days http://www.marketwatch.com/story/google-ipo-has-doubled-afte...
- taigeair 13y ago
  They sell the price at that price to the underwriting investment bank (who takes the risk) and they're done. Then the stocks are out there for people to trade. Twitter doesn't get money or lose money from the market price of the stock. They get more money when they issue/sell more stock.
applecore 13y ago
They only floated about 10% of their outstanding stock on a fully diluted basis. Twitter (the company) could have raised more, but individuals who owned the stock before the IPO still see the gain, unless they did a secondary market offering. Given the dangers of overpricing, it's a price worth paying. (If the stock falls in value on the first day of trading, it may lose its marketability with investors and hence even more of its value.)

kmfrk 13y ago

I can't do the numbers on what they missed out on, but it's definitely money Twitter won't see, yes.

deleted 13y ago

[deleted]

Nicholas_C 13y ago

Approximately $11B According to my quick calculations. TWTR market cap is at $25B currently. They sold 544.7M shares for $26, ~$14B in all. That leaves an $11B difference.

Osiris 13y ago

A question: In an IPO, does the company have to sell every share for the same price? As in a typical market, the price fluctuates based on demand. Couldn't they evaluate the demand for the shares and adjust their sell price higher to compensate, or is it part of the legal framework that they are required to sell all the shares at exactly the same price?

mmahemoff 13y ago
Google tried to pioneer a Dutch auction IPO when they went public in 2004. Buyers would make bids for an amount of stock, and somewhat bypassing the banks, but it was less than successful. The idea has never taken off, not yet anyway. It seems the banks still play an important role in marshalling large funds, and there's apparently significant benefit from a "hot" stock gaining on day 1 (albeit irrational).
- the_watcher 13y ago
  I thought that it was mainly successful for Google, but that it was Google being such an insanely in demand stock that led to the success, not the auction itself. Basically, a Google IPO couldn't really fail. I do know that the banks hated it, and the only reason Google got away with it is because Larry and Sergey couldn't have cared less.
  - mmahemoff 13y ago
    A Google IPO was always going to do well, which is part of the reason they felt they could take a gamble like that. But the stock doubled in 60 days [1], so "eBay for IPOs" didn't create anything like a perfect supply-demand scenario. Maybe it would be different now. 1. http://www.marketwatch.com/story/google-ipo-has-doubled-after-60-days http://www.marketwatch.com/story/google-ipo-has-doubled-afte...
taigeair 13y ago
They sell the price at that price to the underwriting investment bank (who takes the risk) and they're done. Then the stocks are out there for people to trade. Twitter doesn't get money or lose money from the market price of the stock. They get more money when they issue/sell more stock.

applecore 13y ago

They only floated about 10% of their outstanding stock on a fully diluted basis. Twitter (the company) could have raised more, but individuals who owned the stock before the IPO still see the gain, unless they did a secondary market offering. Given the dangers of overpricing, it's a price worth paying. (If the stock falls in value on the first day of trading, it may lose its marketability with investors and hence even more of its value.)