Re:Twilio opens trading at $23.99 per share
by jldugger on Thursday June 23, 2016 @01:24PM
(#11962770)
A lot of your hypothetical hinges on GS / MS buying at 15 and holding at prices below 24. Which is a lot like saying they actually value it at 24, but were somehow allocated shares at a bid lower than that. IMO, Google did it right with the Vickrey / second price auction, and apparently this has been formalized OpenIPO: into https://en.wikipedia.org/wiki/OpenIPO
If we assume that GS and MS have a reserve price of 24, as evidenced by the market open, then their strategic 15 and 16 bids do represent money left on the table.
Re:Twilio opens trading at $23.99 per share
by ProfChronos on Thursday June 23, 2016 @07:02PM
(#11964934)
Fact is Goldman Sachs - and maybe other banks - were allocated shares with a priviledged price during the FB's IPO as they were working on the IPO while buying stocks for their own clients. I know this was a special IPO, but my guess is that it is likely to happen for others
Goldman Sachs would like to buy 50 shares for $14 each. Morgan Stanley would like to buy 50 shares for $15 each. Barclays would like to buy 50 shares for $16 each.
Citizen Bob would like to buy 5 shares for $24 each.
So what happens? HarryCo IPOs at $15 (the maximum I can get to cover all 100 shares) and then immediately pops to $24 when Bob buys 5 shares from Morgan Stanley.
I did not leave $900 "on the table" in my IPO because there wasn't enough demand to sell 100 shares at $24.