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Lina Khan points to Figma IPO as vindication of M&A scrutiny

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Re: Lina Khan points to Figma IPO as vindication of M&A scrutiny

#131

Post by aschobel »

ptero wrote: post #52
wat10000 wrote: post #41

Earlier quoted context omitted.

Why don’t more IPOs do an auction to set the price? Trying to determine the “right” price ahead of time seems like a really bad way to do things.

An auction for IPO price is much easier to manipulate and can lead to much volatility. Pre-allocating to the entities that are not expected to sell quickly or participate in pump-and-dumps (pension funds, etc.) is considered a better long term strategy for the company, as the sister comment says.

Didn't Google solve this with their dutch auction?

Re: Lina Khan points to Figma IPO as vindication of M&A scrutiny

#132

Post by vikramkr »

wat10000 wrote: post #41
alephnerd wrote: post #35

Earlier quoted context omitted.

Except the majority of the Figma IPO was captured by banks due to it's severe pop. So while everyone made a lot of money, the overwhelming majority went to the underwriters [0]. The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33. [0] - https://pitchbook.com/news/articles/figma-ipo-pop-spotlight-…

Why don’t more IPOs do an auction to set the price? Trying to determine the “right” price ahead of time seems like a really bad way to do things.

People like it when an IPO pops. It's a good news story and it makes all the banks who participated happy. If it was priced perfectly it'd get reported as the stock was flat, if it's a bit underpriced then you get headlines as the hot new stock that's taking off

Re: Lina Khan points to Figma IPO as vindication of M&A scrutiny

#133

Post by [deleted] »

margalabargala wrote: post #50
dgfitz wrote: post #25

Earlier quoted context omitted.

Are you asking about supply and demand?

The context of the conversation is one of a horizontal monopoly, in a market that's near saturation, operated by a megacorporation that could afford to ignore profits or losses indefinitely, in the specific industry of robot vaccuums. So maybe the question is "why on earth would someone think supply and demand does apply here?"

[deleted]

Re: Lina Khan points to Figma IPO as vindication of M&A scrutiny

#134

Post by miguelazo »

elefanten wrote: post #51
tptacek wrote: post #37

Earlier quoted context omitted.

I'm not a Khan fan, like, at all, but by the time you're at the point where the FTC is getting involved in your M&A, you've crossed the threshold of success; all the signals to future startups about your path being promising have been sent.

I agree with your general point, but Khan was excessively trigger happy in a way that highlights exceptions to your observation. E.g. blocking Meta acquisition of Within was nonsense that did nothing to validate the concept of VR fitness as a promising category (anytime soon) Edit: Within, not Withings

Just because VR fitness was a flop hardly proves your point. Most people expected that to happen.

Re: Lina Khan points to Figma IPO as vindication of M&A scrutiny

#135

Post by ptero »

aschobel wrote: post #131
ptero wrote: post #52

Earlier quoted context omitted.

An auction for IPO price is much easier to manipulate and can lead to much volatility. Pre-allocating to the entities that are not expected to sell quickly or participate in pump-and-dumps (pension funds, etc.) is considered a better long term strategy for the company, as the sister comment says.

Didn't Google solve this with their dutch auction?

Yes. But Google being Google it got top notch planning advice from world class auction experts that Goldman pulled in to advise them on the IPO.

Most companies without such expert advice could step into some pitfalls. Just a guess, I am not an expert, but if my company were doing an IPO I would prefer it not to play financial games to eke out a percent of IPO price and instead focus on long term price stability to become a solid stock. My 2c.

Re: Lina Khan points to Figma IPO as vindication of M&A scrutiny

#137

Post by SilverElfin »

el_nahual wrote: post #40
alephnerd wrote: post #35

Earlier quoted context omitted.

Except the majority of the Figma IPO was captured by banks due to it's severe pop. So while everyone made a lot of money, the overwhelming majority went to the underwriters [0]. The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33. [0] - https://pitchbook.com/news/articles/figma-ipo-pop-spotlight-…

The IPO "pop" is not captured by banks: it's captured by the banks customers that pre-buy at the IPO price. Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers. There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc. Those buyers then make offers ("I'll buy 50MM…

Seems undemocratic. Everyday folks can’t buy even though they would want to

Re: Lina Khan points to Figma IPO as vindication of M&A scrutiny

#139

Post by conradev »

SilverElfin wrote: post #137
el_nahual wrote: post #40

Earlier quoted context omitted.

The IPO "pop" is not captured by banks: it's captured by the banks customers that pre-buy at the IPO price. Basically, before an IPO, the underwriters take the company on a "roadshow" in which they pitch the IPO to potential buyers. There's a hierarchy of these: the best are very large buyers that place large orders and trade seldom. Pensions, sovereign wealth funds, etc. Those buyers then make offers ("I'll buy 50MM…

Seems undemocratic. Everyday folks can’t buy even though they would want to

It’s just a bulk discount: everyday folks simply can’t be relied upon to buy hundreds of millions of dollars the stuff and that’s what the company is selling. Little fish can buy in, but only if the big fish provide liquidity in the first place! In other words: someone needs to be paid to sell it and big buyers need to be incentivized to buy it.

Ultimately the IPO price is driven by supply and demand with a limited supply: price will go down (a bit) when the lockout period ends and more supply comes online.

Re: Lina Khan points to Figma IPO as vindication of M&A scrutiny

#140

Post by conradev »

wat10000 wrote: post #41
alephnerd wrote: post #35

Earlier quoted context omitted.

Except the majority of the Figma IPO was captured by banks due to it's severe pop. So while everyone made a lot of money, the overwhelming majority went to the underwriters [0]. The founding team at Figma would have gotten a similar amount much sooner if the acquisition was let thru OR if the underwriters didn't screw them over by underpricing at $33. [0] - https://pitchbook.com/news/articles/figma-ipo-pop-spotlight-…

Why don’t more IPOs do an auction to set the price? Trying to determine the “right” price ahead of time seems like a really bad way to do things.

Price discovery is impossible to do except on the market. You can call up everyone you know and ask them, but there are limits to forecasting.

We all knew the Switch 2 MSRP, but we had to wait for launch to see the eBay Buy it Now price.

In this case, the banks are Best Buy. They sold out quickly! Other market players are eBay sellers: the ones that knew what they were doing made a killing selling to consumers.

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