Which doubled before one had blinked in,
Either banks ripped off clients,
Or it's more art than science;
It's a point which the truth's indistinct in.
The IPO of the professionally oriented social networking site LinkedIn created a sensation last week when the offering price of $45 was quickly more than doubled in the first day of trading. The IPO "pop" became the object of furious debate between those who saw a successful issue creating investor excitement and those who objected that the deal was underpriced and the company thereby deprived of potential capital. Underwriters Morgan Stanley, Bank of America and JPMorgan may indeed have delivered a windfall to their favored investors, who could have flipped the shares and doubled their money immediately; however, since the original $4.3 billion valuation (at $45/share) seemed bubblicious for a company that earned $15 million last year, all the complaints about ripping off the company may amount to 20/20 hindsight.
P.S. I was surprised to see a wave of financial market visitors to this post yesterday, but at a loss to see what prompted it. Leave a note if you know the answer.
ReplyDeleteMaybe it was the link in the NYT's Dealbook (the afternoon digest):
ReplyDeleteA LinkedIn Limerick: OK, it's not an Elizabethan sonnet, but then initial public offerings are rarely the stuff of poetry. (A tip of the cap to Felix Salmon.)
Thanks for clearing that up!
ReplyDelete