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Isn't the supposed purpose of an investment bank to properly value the company so that these massive IPO pops don't happen? The fact that they happen at all me
by nanidin 13y ago
Isn't the supposed purpose of an investment bank to properly value the company so that these massive IPO pops don't happen?
The fact that they happen at all means the banks are not good at what they do, or they do it on purpose so they can distribute wealth to their desired parties.
- Mikeb85 13y agoIdeally, yes. But they do undervalue so that there's more incentive for IPO investors to buy in. Value it too high, IPO investors won't bite, and the firm won't raise as much capital as they want. The real story is that Twitter raised 1.8 billion in cash, the market is just a side-show.
- arjunnarayan 13y agoExcellent point! Except the banks collude. Here's some evidence: http://blogs.reuters.com/felix-salmon/2011/06/07/the-us-ipo-cartel/ http://blogs.reuters.com/felix-salmon/2011/06/07/the-us-ipo-...