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发帖数: 2260 | 1 https://www.forbes.com/sites/timworstall/2017/03/12/snaps-ipo-was-a-success-
because-it-fell-19-not-despite-it-falling/#5f91a5b23b6e
Snap's IPO Was A Success Because It Fell 19%, Not Despite It Falling
It always amuses to see those worrying about whether an initial public
offering was a success or not. For almost always those worrying use entirely
the wrong metric to judge said success or not. In general, if an IPO leads
to a soaring share price well above the initial then everyone says that's a
success. If the price falls from that offering price then it was
unsuccessful. From the economic point of view this is entirely the wrong way
around. A price that falls from that at which the stock was first sold is a
success, one that increases massively is a desperate failure.
Think about this in economic terms for a moment. There are some few people (
almost always fewer than 500, as that's the number of stockholders at which
an American company has to obey all the SEC dictums about reporting and so
on, and if you've got to do that why not go public?) who currently own a
company. They are now going to sell some percentage of that company. It
might be new stock, the price of which goes into the company coffers as
capital, it might be old stock in which case the current owners trouser the
wedge. Those sellers obviously want to gain the best price they can for that
stock. Because, equally obviously, they want as much money as they can--we'
re all consenting capitalists around here after all.
At which point this is the wrong way to think about it:
Can Snap Stock Bounce Back After Last Week's 19% Drop?
Snapchat's parent company takes a step back in its second week on the market
, but it's still a successful IPO.
No, it isn't "here because of these other reasons" the Snap IPO was a
success, it's precisely because it fell 19% after launch that it was
successful.
The stock of Snapchat's parent company has been on a roller-coaster ride
since its market debut last week, surging more than 70 percent from the
initial public offering price in the first two days of trading and plunging
back down by a quarter since.
Yes, I know that the price is above the initial offering price so if we
start with that then by my metric this IPO is a failure. It's down from the
first day pop which is what is being complained about above, above the
actual offering price. But my logic still holds, just choose your starting
price to see which way around this goes.
Snap (SNAP) went public on March 2. The few analysts who had weighed in on
the stock had nothing but cautious things to say, issuing only “sell” and
“hold” ratings.
But don’t be surprised to see more optimistic ratings 25 days after the IPO
date, which is when analysts from larger banks are expected to release
ratings of their own.
Well, yes, there is the period when analysts tend not to do much advising.
It's also about that period before anyone is allowed to short a newly issued
stock which means that it's an interesting time span for another reason.
But back to my point about success and failure in an IPO. There are
secondary and subsidiary issues, certainly. People who are contemplating
future share issues (whether as stock to purchase another company, or for
more capital for the company, just to sell down holdings, whatever) would
prefer that outside investors didn't get so thoroughly burned as to be toast
because that would make those future stock sales more difficult. But that
is a secondary issue, one hugely outweighed by the primary one.
We, the current stockholders, want to get as much money for our stock as we
can. If the price soars after we sell then that's money that we don't get.
It's money that the outside investors have got and we haven't--that's not
the point of what we're doing here at all. If the price collapses after we'
ve been guaranteed our money then that's great. Because we've got the higher
sum of money and people who are not us do not.
That is, don't ever forget than an IPO is someone selling something. And to
the seller gaining more of your money is a good thing, not a bad one.
Consider someone selling herrings. Herrings just because so many of the Leo
Rosten type Yiddish jokes are about herring salesmen. He sells herrings last
week at 19% above the price he can sell them this week. This is going to go
down as an unsuccessful piece of herring salesmanship, is it? No, clearly
not, this is a successful piece of work, not a failure.
So it is with an IPO. Yes, there's still that secondary interest in that you
don't want buyers to be so frightened off the stock that they'll never
consider it again. But a price that is at about or below the post-IPO price
is a success, because it means the sellers left no money on the table. A
price that soars after the IPO means the sellers left too much on that table. |
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