Re:Snap Jumps in Debut After App Maker Raises $3.4B in IPO
by edblarney on Thursday March 02, 2017 @04:20PM
(#13778335)
1) They try to be a shade conservative when pricing for IPO because the stock going down on day 1 is a very bad.
2) The underwriters are invented to keep it low because they basically keep the upside - i.e. they buy from Snap at the low price and will sell the next day on the pop.
3) It's volatile because there's little basis for the valuation - they're making almost no money and have a massive, massive valuation = it's hard to establish what they are worth = more variation.
4) Retail investor hype. Every dentist, doctor and retired guy wants a piece to feel like they are 'getting part of the IPO' and there's irrational exuberance which pushes the prices around.
2) The underwriters are invented to keep it low because they basically keep the upside - i.e. they buy from Snap at the low price and will sell the next day on the pop.
3) It's volatile because there's little basis for the valuation - they're making almost no money and have a massive, massive valuation = it's hard to establish what they are worth = more variation.
4) Retail investor hype. Every dentist, doctor and retired guy wants a piece to feel like they are 'getting part of the IPO' and there's irrational exuberance which pushes the prices around.