

Facebook: "going IPO!" - dawie
http://valleywag.com/tech/facebook/f+++-you-yahoo-theyre-going-ipo-276254.php

======
far33d
I'm buying, unless they drastically under-price the offering.

~~~
wmorein
Underprice? Buy high, sell low?

:)

~~~
far33d
If they underprice the offering, the price will go up a LOT during public
trading on the first day, hence, high actual price for everyday investors and
a big payout for the IBankers.

So what I'm saying is, if I can get in at a reasonable valuation, I'm in. If
not, I might wait it out til the hype wears down a bit.

~~~
byrneseyeview
'If they underprice the offering, the price will go up a LOT during public
trading on the first day, hence, high actual price for everyday investors and
a big payout for the IBankers."

False. Investment Bankers get paid a percentage of the offering price. If the
price is lower, they make less money.

~~~
far33d
Their cronies (and often the bankers themselves) take large amounts of the IPO
shares.

~~~
byrneseyeview
So when you refer to 'ibankers' as a group, you mean 'ibankers who steal from
their employers'? Isn't this a distinction you ought to make? And doesn't your
previous statement make sense if you were merely uninformed?

~~~
far33d
I might be uninformed here, but don't the underwriters of public share
offerings often also hold on to blocks of shares after the offering
(completely legally)?

~~~
byrneseyeview
They only do that if they can't sell the stock. The point of underwriting is
to sell all of the shares as quickly as possible. If your argument is true,
it's not just a reason to avoid cheap stocks -- it also obligates you to avoid
deals of any sort, since exactly the same inefficiencies exist.

~~~
far33d
I see. So an underpriced offering actually avoids the underwriters holding the
stock- since there is obviously demand. I was under the impression that during
the dot-com boom, a lot of the underwriter banking organizations were buying
their own underwritten shares at IPO prices and benefiting from the early
upswings (basically, arbitraging the lower offer prices).

~~~
byrneseyeview
They certainly do distribute it to favored clients if it's a hot IPO, but they
have to balance the needs of clients and issuers: from what I've heard, that
meant that you could only get in on a good IPO if you also bought into some
less exciting ones. It's not like an investment bank can consistently screw
one kind of customer without driving that kind of customer to another bank.

------
palish
Interesting.. I wonder how it will turn out.

~~~
create_account
Unless they're really generating tons of revenue, going public might be a
rough road.

Sure the founders and investors get to cash out, but Wall Street checks in
every three months, and can be unforgiving if you fail to meet expectations.

Remember that the Google guys didn't want to go public.

