News for hackers. Stuff that matters.

A comment on LNKD IPO opens huge at $83. Parent comment

Re:LNKD IPO opens huge at $83 by brown9-2 on Thursday May 19, 2011 @02:22PM (#2564919)
Those are good points, and I'm not arguing that they left a lot of money on the table or didn't, but what I am disputing is where you said "We won't know whether the $45 price was optimal or not for a while --it may seem expensive in 90 days when the price settles down."

Why does the price 90 days from now matter to the judgement of whether or not the initial sale - today's sale only - was a success? If the price drops below the initial sale value, then $45 today will definitely seem expensive to people buying it 90 days from now. But I don't see where it would mean that the company made a mistake in the initial offer of $45/share - in fact, wouldn't it look like the company got a good deal, in selling the initial shares at above-market-values (in 90 days from now)?

[ Parent | on HN ]
Re:LNKD IPO opens huge at $83 by jeffreymcmanus on Thursday May 19, 2011 @07:10PM (#2565702)
The reason is because (in the absence of clairvoyance) the performance of stocks is evaluated over time. If the price is closer to $45 in a month or two, it'll be easier to say that today's price jump was an aberration. If the price is $180 in three months, it'll be possible to say that today's price is actually too low.
[ Parent | on HN ]
Re:LNKD IPO opens huge at $83 by brown9-2 on Thursday May 19, 2011 @07:54PM (#2565815)
But we aren't discussing the long-term performance of the stock here - we are discussing the wide range between what their initial offer is, and the amount the IPO underwriters got to take home.
[ Parent | on HN ]