
JP Morgan to Grant IPO Access to Everyone - areski
http://techcrunch.com/2015/10/21/jp-morgan-to-grant-ipo-access-to-everyone/
======
ChuckMcM
And this is so not part of a scheme to get the subscription price of an IPO
higher than the institutional investors will tolerate.

I am perhaps to cynical here, feel free to dismiss my rant, but as Andressen
pointed out a lot of the "value" is being captured on the internal rounds
these days, not post IPO. And what that means is that when a stock comes to
market it can be "hard" to get the valuation of the company to match its last
round, much less get it above that. And as we saw with Box, coming in under
often means having to accommodate your late stage investors some how.

So lets bring in retail investors! And with enough of those folks we can have
_them_ raise the price of the IPO roadshow and well if the price is flat to
down after that and they lose all their money, too bad. But hey they were "in
at the IPO" right? Watch your prospectuses closely boys and girls, I bet on
these same IPOs we'll have "investor participation" which is code for the late
stage investors selling their shares in the IPO rather than having the company
collect the proceeds.

See? JP Morgan thinks they are doing everyone a favor and all I can see is a
barely disguised scheme for the private investors to fleece the retail folks
out of their money.

~~~
bsder
It's basically an admission that the big investors got "preferences" on the
previous rounds that nobody wants to deal with. So, they'll try to sucker the
general public.

------
jackgavigan
This reminds me of what Google tried[1] (with limited success[2]) to do with
their IPO.

During the Dot-com Boom, allocations of shares in hot IPOs were highly sought
after, as investment banks seemed to consistently price the offerings to
guarantee a pop in first-day trading, and award allocations to their favoured
clients. Effectively, the investment banks were under-pricing the shares such
that the company going public "left money on the table", which got picked up
(at relatively low risk) by the i-banks' preferred clients.

Companies seem to have grown wise to this and started putting more pressure on
the i-banks to ensure they don't end up leaving money on the table (c.f.
Facebook, Pure Storage). Therefore, the i-banks' favoured clients are less
interested in taking IPO allocations, so the i-banks need to widen the net to
find more investor demand.

1:
[http://www.wsj.com/articles/SB108328345314098183](http://www.wsj.com/articles/SB108328345314098183)

2: [http://www.cnbc.com/2014/08/19/es-took-off-but-the-
auction-d...](http://www.cnbc.com/2014/08/19/es-took-off-but-the-auction-
didnt.html)

~~~
sjg007
True. Funny thing that may or may not be a motivating factor. Except for
Google and Facebook, a lot of recent IPOs are trading below their offer price.
Maybe the bigger I-bank clients recognize this (even mutual funds) so they are
buying at the pre-IPO in late financing rounds. However, they still need
someone to buy at the IPO, and who better than Joe Public?

~~~
ksherlock
The Google and FaceBook IPOs were considered a failure (by conventional wisdom
standards). Of course, the money went to them and not the wall street bankers.

~~~
tromobne8vb
This always cracks me up. In reality they got the price correct and maximized
the money that the company got for doing the IPO in the first place. The
problem is that there is an expectation that IPO stocks will 'pop' and allow
wall street to line their own pockets. Since they didn't, they consider it a
failure.

------
al2o3cr
Translation: "We have initiated a plan to tap into the strategic fool reserve
for when the unicorns go public"

Those pre-IPO shares aren't gonna unload themselves before the price crashes,
ya know.

------
watmough
Hmmm, call me an old cynic, but this kind of populist move typically comes
before a downturn.

~~~
neffy
Call me a young one, but I think it happens every time before a major downturn
:)

[http://gutenberg.net.au/ebooks05/0500831h.html#c12](http://gutenberg.net.au/ebooks05/0500831h.html#c12)

------
swingbridge
More signs that tech startups are overvalued... needed to broaden the base of
suckers to maintain the viability of some future IPOs.

------
stevecalifornia
Imagine the comments in here if IPOs were already available to everyone and we
were reversing it to only allow big banks and partners to participate.

I personally am for everyone having equal access to IPOs and start-up funding
and such. Anything else is opposed to the founding principle of this country
of personal liberty-- and it's also opposed to reducing the wealth disparity.

In summary, it's not your job to protect me from myself.

------
AndrewKemendo
This plus the other news about NASDAQ doing similar moves I think is a bad
sign. Public markets are clearly indicating they are failing to attract the
big players, especially in technology, and this is their strategy.

The problem is, if their strategy works, the public would be way more exposed
to risk like they were in 99/00 and any bubble bursting would have big
impacts. As of now any bubble wouldn't have that widespread of ramifications.

On the flip side, this would likely drive markets up for a while and show a
paper "improvement" of the economy because the numbers are public and
auditable. Wouldn't last though.

------
pzs
The investors who make a fortune with IPO's are the ones who sell, not the
ones who buy at the IPO.

~~~
buzzdenver
True, but you could make good money as well by having access to all IPO-s. I
did the math a while back and selling the first day you could average around
10%, which is nothing to sneeze at.

------
kspaans
> Founded in 2010, Motif is an online broker that allows investors to trade
> baskets of stocks centered around particular themes or investing styles.

AKA "Hey boss I heard these index fund things were popular. Let's get in on
that, but make it EXCITING!"

It looks like, at the very least, Motif doesn't charge you an annual fee for
the privilege of buying 30 stocks in one click.

~~~
stevecalifornia
Motif allows you to make personal baskets and invest in it with one click and
one fee. You can also share your basket with others.

If you were to try and make a basket of 30 different stocks with some other
broker you would have to pay 30 different transaction fees.

------
wtmt
This limited access to IPOs in the U.S. has always seemed very…limiting and
also kind of unfair.

In India, IPOs approved by SEBI (the equivalent of SEC in the U.S.) have been
available to all retail investors for a very long time and has improved a lot
with online brokerages over the last 15+ years. You just need to have a demat
account, which you could also open along side the application for the IPO. I
don't understand why companies going public in the U.S. wouldn't want a wider
reach for IPOs, which can easily come by getting retail investors to
participate.

------
buzzdenver
Some first day pop is natural even with auctions, because the issue price has
to be a lowest that buyers support.

Consider a company that wants to raise $100. Suppose there are 19 buyers who
value a share at all different prices from $1 to $19, and are willing to buy 1
share each. The issue price will be $10. Those who offered $1-$9 will not get
an allocation; those who offered from $10 to $19 will. The buyer who thinks a
share is worth $19 will probably buy some at a > than $10 price, so voila a
pop.

~~~
tdaltonc
What about the guy who thinks it's worth $1? Wouldn't he attempt to short the
stock immediately after the end of the auction, canceling the pop?

~~~
whatok
While it's possible, in practice it's generally difficult to short IPOs
because your broker needs to locate shares and underwriter restrictions in the
borrow process.

------
antr
Caveat emptor

~~~
rcarrigan87
"There is often a significant “pop” on a company’s first day of trading as a
public company, with double-digit percentage gains in the share price. But the
gains are based on the IPO price that gets determined the night before the
first day of trading — the price where the stock opens is often much higher."

------
a3voices
Sounds like a great scheme for the founders and VCs to 'exit' using money from
the middle class.

~~~
cowsandmilk
normally, founders and VCs have lock-up periods.

If I was a founder/VC, what I would be looking for out of this is not leaving
money on the table (as others have mentioned).

The greatest thing for me on IPO day would be to go down by 5% on the public
markets instead of popping. That means my company got an appropriate amount of
cash by putting shares out onto the public market.

------
7Figures2Commas
In other news, Motif Investing today announced that it is rebranding as Muppet
Investing.

