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Lending Club IPO Up 56% on First Day, Sets Stage for Hortonworks and New Relic
- lifeisstillgood 12y agoI always think that if my IPO was priced such that it doubled or whatever on the first day, I should sue my bankers for the difference between what I got and what it was worth. In the end, it's the coke machine theory - I should IPO at a price that sells all available shares but one.
- Danieru 12y agoExcept when you IPO you do not sell all your shares. You want the price to go up and maximize your personal upside.
- cylinder 12y agoYou still get the same upside, all that matters is the price. You own the shares already, you're not buying them in the IPO.
- antr 12y agoPricing is not a one-sided exercise. Underwriting banks are insuring a floor, that's the main roll of banks. But it's the company's management who approve a share price (valuation) range, if the IPO price falls within that range, management gives the go ahead to banks. If the price doubles, this is outside the control of the banks and company. Just note that the higher the IPO price, the higher the underwriters' fees... on the other side, new investors are looking for a "bargain". Pricing an IPO is just finding an equilibrium between supply and demand... and if you issue a small amount of shares, and these sky rocket, it sometimes has little to do with valuation and more with liquidity[0]. [0] https://signalvnoise.com/posts/1941-press-release-37signals-valuation-tops-100-billion-after-bold-vc-investment https://signalvnoise.com/posts/1941-press-release-37signals-...