Re:Did a Stuck Quote Prevent a Facebook Opening Day Pop?
by lowboy on Saturday May 26, 2012 @07:04PM
(#4028649)
Right, and I agree that the underlying value of FBComp hasn't changed. But that variability in the correctness of pricing of a stock is part of the game, is it not? As is the mis-estimation of a company's "true worth" by investors. If the problems with NASDAQ weren't present, and there was a first day bump as expected, I could see that instilling confidence in investors, driving demand for the stocks. Hence nanex's strongly worded quote about ripple effects. Do you disagree with that?
Ultimately we'll never know what would have happened, but the negative ripple effects seem plausible.
The reason that a 'bump' occurs is that money is being left at the table - ideally, stocks should exhibit no bump, because that means that the company has priced their stock correctly. Any bump means that traders are reaping the profit of the increase in the stock's value, and that profit is what the company was seeking to gain by going public.