Twilio opens trading at $23.99 per share

Re:Twilio opens trading at $23.99 per share by tomp on Thursday June 23, 2016 @01:25PM (#11962779)

But classic econ 101 would also say that if the above was true, then everybody who thought the shares were worth only $15 (plus spread) would sell, resulting in share price dropping back to around $15.

I think you're wrong. My reasoning is simple. If the IPO investors thought that the company was worth less than $24 (e.g. $16), they would have sold already, and the price would have dropped. If they thought the company is worth $24 (or more), they would have bought the IPO at any price between $16 and $24 (minus spread) as well.

Really, the only argument for under-pricing the IPO is as a favor to the banks/hedge funds. But the question is, did the banks ever return the favor?

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Re:Twilio opens trading at $23.99 per share by eldavido on Thursday June 23, 2016 @01:34PM (#11962857)

Isn't there some law that all investors buying stock at around the same time have to be offered the same terms?

I'm not a lawyer but I think this is part of what's behind the trend toward convertible notes in company financing in SV, compared to the traditional priced equity round -- too hard to give a different deal to different investors, for what amounts to the same shares?

Would love to hear more from someone who knows more about this.

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Re:Twilio opens trading at $23.99 per share by whatok on Thursday June 23, 2016 @01:31PM (#11962841)

I think it's very hard to argue that day 1 or near-term price action on any IPO is solely based on value instead of sentiment.

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