Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : BAK - Investing -- Ignore unavailable to you. Want to Upgrade?

To: Flipper2058 who wrote (2775)	5/23/2012 9:57:53 AM
From: cfimx	Read Replies (1) \| Respond to of 3249

Re: re FB - interesting to see so much blame for the FB IPO but is Morgan Stanl that may be true. but the result of their dutch auction resulted in a much fairer price to the public. those that did the homework on the company, and understood it, did very well buying in at $80. there was a guy in SF, Hambrecht, who tried to transform the IPO market into more of an auction system. I don't think he did very well. But he did take Goog public. He doesn't do that well because most companies want top dollar for the company (FB), which translates to a bad deal for the buyer.

To: Flipper2058 who wrote (2775)	5/23/2012 2:12:23 PM
From: DoggyDogWorld	7 Recommendations Read Replies (1) \| Respond to of 3249

Re: re FB - interesting to see so much blame for the FB IPO but is Morgan Stanl The 2 GOOG founders TRIED to do a Dutch Auction aorund $120, it was a flop. ........ So the $120 range was reduced and the 2 founders thankfully opted to wash their hands of it and let the underwriters do their job. You make it sound like the Dutch Auction failed so GOOG let the underwriters run a traditional IPO. That's not at all what happened. GOOG's original price range was 108-135. But Nasdaq dropped 12% in the weeks leading up to the IPO and GOOG's founders did some dumb things (e.g. the infamous quiet period Playboy interview). Instead of pulling the IPO they dropped the price range to 80-95. Of course traditional underwriters drop IPO prices all the time in tough markets. GOOG still did a Dutch Auction, though, they did not "wash their hands of it" and let the underwriters and their cronies run a traditional rigged IPO. Well a Dutch Auction means the top bidders get stock....so when it starts trading who is left to pay higher? No one, obviously. Your logic makes no sense. Billions of shares are auctioned to top bidders every day from 8:30am-4:00pm on the floor of the NYSE. There are no shortage of buyers. Dutch Auction means top bidders get stock, but at the lowest clearing price. Buyers who bid 50 but get filled at a clearing price of 40 might would quite rationally buy more at 42-45 once trading starts. In fact, Dutch Auction virtually ensures some buying pressure when the stock opens. GOOG went one step further. Instead of filling the top X bidders at the clearing price, they pro-rated everyone and lowered the clearing price from 98-ish to 85. This guaranteed a pop at the open. You can gift cash to your IPO buyers just as easily with a Dutch Auction as a traditional IPO. Dutch simply gives you the potential to eliminate the cronyism and corruption that permeates traditional IPOs. Bottom line: GOOG's Dutch Auction succeeded and FB's traditional IPO failed. I understand why you like the old IPO process. You've made a great living off it, you understand it and "that's how it's always been done". But the traditional IPO order book process is a throwback to the days of ticker machines and paper stock certificates. Like T+3 settlement, it's no longer appropriate and causes more problems than it solves. We should have cleaned up this anachronistic cesspool a long time ago.