Meaningless unless you were rich AND lucky enough to get into the actual IPO. All the retail investors that bought as fast as they could at $46 didn't really reap and benefits.
TWTR
271–280 of 349 posts
Re: TWTR
#272If it stays at $46, that's a gigantic fuck up. They left a billion dollars on the table, and that's borderline breach of fiduciary duty. Of course, we have to wait and see what it settles at, and it's a little premature to heap scorn just yet. But the initial reaction is it looks like they overreacted to the Facebook IPO debacle (in my book, Facebook did the best thing possible for the company and extracted as much v…
What's the problem with the stock prices remaining high? How is that leaving money on the table? I'm genuinely curious, and have no idea how these things work (if you feel like explaining it like I'm 5 - or directing me to a site that can).
Edit:
Unless you mean that twitter "sold" shares at $26, but the actual value was closer to $46 - meaning their investors nearly double their money, and twitter raise nearly half of what they could have?
Re: TWTR
#273Earlier quoted context omitted.
The underwriters who will make hundreds of millions here... (EDIT, well, many millions at least) What sort of risk are they taking that justifies their rewards and how does it help the economy? And the individual bankers who will take millions of dollars in bonuses home because they get paid for the 12th time and don't get penalized for the 11 others, what sort of innovation did they contribute to the world? I think…
One comment... Google and Facebook each tried to stick it to the bankers in their own ways. In the end both struggled as a result. Google tried to cut out bankers and make them play by special "Just for the Google IPO" rules and rates. By creating a custom-IPO process, they saved on banker fees but wound up leaving an awful lot of money on the table. Facebook went the other way. They tried to grab every last penny on…
"Google and Facebook each tried to stick it to the bankers in their own ways."
This is a good example of a situation where you should stay close to what you know and stop thinking you can outsmart people who make a living a certain way everyday and know as much or more than your advisers. And definitely more than "you" (meaning the google guys) who made decisions based on things they read or what they were advised as opposed to having an actual seat of the pants feel for why something is done a certain way. And the pros and cons.
There is a reason, you know, why people cooperate with the "mafia" and pay the vig and play the game. Is it right? No. But stick to what you know and stop thinking you can outsmart others out there who do something for a living and have established procedures and actually do add value in a system that essentially works. So others take their cut.
Re: TWTR
#274Earlier quoted context omitted.
"If Twitter is worth $50 bucks a share why were its investors willing to part with their stock for $26 a share only yesterday?" http://en.wikipedia.org/wiki/Time_value_of_money http://en.wikipedia.org/wiki/Expected_value
Yes. Yes. That's not the question. The question is why does an insider who is intimately familiar with all the details of the business and has been following it since it started values it so much less than Joe Plumber who is clueless and buying it today on the stock market. If Twitter is such a good business why would I as an owner want to part with it? What is it going to be doing with the cash it raised? As Warren…
Market Dynamics.
The "insider" doesn't have to compete with as many people for an ownership share. A small sampling of "insiders" does not efficiently price a security the way an offering to the greater market does.
This idea that capital markets are designed to screw over the little guy is amusing to me to see HERE on THIS WEBSITE of all places.
You act like the market works like Amazon.com where these scary "insiders" list $45 price tags on things. In reality, people are creating BIDS. That's how it works.
Re: TWTR
#275Earlier quoted context omitted.
I think you fundamentally misunderstand the process but that is ok, its not all that straight forward. The transaction here is between risk takers (venture capitalists and investment banks) and risk pricers (people who buy stock). Nobody is getting "ripped off" as long as everyone is following the rules set down by the SEC. Investors put money at risk. You know that because you've been here on HN a couple of years an…
The underwriters who will make hundreds of millions here... (EDIT, well, many millions at least) What sort of risk are they taking that justifies their rewards and how does it help the economy? And the individual bankers who will take millions of dollars in bonuses home because they get paid for the 12th time and don't get penalized for the 11 others, what sort of innovation did they contribute to the world? I think…
The underwriter take a huge risk in the deal, underwriting means that he sometimes needs to buy the shares from the company (i.e. Twitter here) and Twitter will not need to care if the underwriter get reed off the shares on the market because he got paid first this is a huge risk .
A second point is that the underwriter is paid to keep the shares liquid on the market at least for the first 30 days depending on the contract deal. It means that the underwirter will need to put himself on the buying side or the selling side everytime someone want to buy/sell his shares ... this is a huge risk again just look at the volume of the share deals everyday on the market to see what kind of liquidity the underwriter need to keep ready to play ... I agree with you that this don't create value for the economy out there but it is necessary to keep the wheel rolling ...
Re: TWTR
#276Earlier quoted context omitted.
One comment... Google and Facebook each tried to stick it to the bankers in their own ways. In the end both struggled as a result. Google tried to cut out bankers and make them play by special "Just for the Google IPO" rules and rates. By creating a custom-IPO process, they saved on banker fees but wound up leaving an awful lot of money on the table. Facebook went the other way. They tried to grab every last penny on…
Help me understand why Facebook taking every dollar out of the market was a bad thing for them. I understand why Wall Street wasn't happy about it (since they expected a pop they could profit from & had to buy stock to fulfill their obligations... and why should taking a company public be an entirely risk-free profit opportunity anyway?) But, why was it bad for Facebook? Sure, their stock was below the IPO value for…
I saw a few intelligent commentaries about this who agreed it was a great IPO for Facebook. The way I think about it, they floated it like a wet sponge, something you can only do if you are confident and taking the long view.
Re: TWTR
#277Can someone with more clue please tell me that the following cynical thought I keep having is wrong and laughably misinformed (and then explain why)? Twitter's investors (who have plowed hundreds of millions in to a loss making company) decide to sell some of their stock at $26/share (after consulting with banks to arrive at this price). This will make right the losses they've experienced so far and pass the problem…
How does Wall St always seem to end up with the blame on these threads? They priced the Facebook IPO too high and they get the blame, they priced the Twitter IPO too low and they get the blame. The company just went public and raised $2B+ at a higher valuation initial valuation then anyone expected. IPOs are tricky things to get right. Give it a few months for the hype to settle down before you start screaming about…
Yeah how could people distrust banks after they've shown to be so completely trustworthy and transparent recently...?
Re: TWTR
#278Earlier quoted context omitted.
> borderline breach of fiduciary duty. That's not a real thing. http://skeptics.stackexchange.com/questions/8146/are-u-s-com...
"breach of fiduciary duty" is a very real thing. (29 USC § 1109 specifically) In this case it has nothing to do with the link you posted. He means the contract that Twitter signed with the banks probably has language that says they will attempt to get the best possible price for the shares. The resulting pop shows that they did not do that.
He means the contract that Twitter signed with the banks probably has language that says they will attempt to get the best possible price for the shares. The resulting pop shows that they did not do that.
Not true. If I'm selling 1 share and see $40, I can probably get $40 for that share. If I'm selling 1M shares it is a lot harder to get $40 for every single one. If I'm selling ~550M shares with zero existing market then getting that $40 is nearly impossible. Twitter worked out a guaranteed ~$26/share which is pretty good. A bird in the hand is better than two in the bush and all that.
Re: TWTR
#279Earlier quoted context omitted.
QE myths: http://business.time.com/2013/09/18/taper-tantrums-3-myths-a...
Alright, since you can't speak for yourself or rebuttal with anything more meaningful than "This is nonsense.", I'll respond to the article. 1.) Quantitative Easing is printing money -- "This is because when the Fed buys bonds from banks it does so by crediting those banks’ accounts at the Fed with reserves that didn’t exist before. But it’s misleading to call this process “money printing” because it doesn’t actually…
I'd prefer this to QE because it should cause a bigger increase in money velocity. http://en.m.wikipedia.org/wiki/Demurrage_(currency)
Re: TWTR
#280Earlier quoted context omitted.
Yes. Yes. That's not the question. The question is why does an insider who is intimately familiar with all the details of the business and has been following it since it started values it so much less than Joe Plumber who is clueless and buying it today on the stock market. If Twitter is such a good business why would I as an owner want to part with it? What is it going to be doing with the cash it raised? As Warren…
Market Dynamics. The "insider" doesn't have to compete with as many people for an ownership share. A small sampling of "insiders" does not efficiently price a security the way an offering to the greater market does. This idea that capital markets are designed to screw over the little guy is amusing to me to see HERE on THIS WEBSITE of all places. You act like the market works like Amazon.com where these scary "inside…
I'm not sure what your expectations are of this web site but as far as I can tell we're a bunch of people with different opinions. :-)
To me an IPO is very much a conflict of interest situation with asymmetry of information. There are laws to govern this but there is a huge gray area.
Once a company is public it's a little different...
In my opinion capital markets have been getting more broken in many ways and have been favoring the big guys over the little guys in many ways. I say that as someone who invests in the markets, have benefited from stock options and pretty much seen things from many different angles. In the last 15 years capital markets have failed to deliver the economic growth and the gap between the rich and the poor has widened.