Google Chooses An Underwriter For Upcoming IPO

PenguinSix writes "Bloomberg and a bunch of others are reporting that Google has hired Morgan Stanley and Goldman Sachs Group Inc. to arrange its initial public offering. This follows literally years of rumors and stories about a Google IPO. About a third of Mountain View, California-based Google may be sold in the IPO, giving the company a market value of about $12 billion, the bankers said." Google has become so invaluable to many people (like me) that they could probably raise just as much money with a blackmail scheme.

Comments

Be Careful: Use Buy Limit Orders

[G4from128k]

If you do buy Google on day 1, don't use a market order (especially in the first minutes). If the IPO becomes a feeding frenzy, you could easily end up paying 2 or 3 times what you expected (and yes, your broker WILL hold you to that price, no matter how bad it is). Instead, use a buy limit order to ensure that you pay no more than your target price for the stock. With a limit order it is possible that you will get no shares (if the stock blows past your price). On the other hand, you are ensured that you won't get shares at some outrageous price.

Re:IPO: It's Probably Overpriced

[daveo0331]

Traditionally IPO shares are initially sold at a fixed price, which tends to be below the price it will sell for in the first few days on the open market. The insiders then have a tendency to allocate IPO shares to their buddies, or family, or the bank handling the IPO, or whoever. Therefore people with "connections" can (essentially) get free money by buying IPO shares and then selling them quickly. If you are lucky enough to have access to this free money, it's in your best interest to take it.

Since the Google IPO is being done differently, there's no opportunity for insiders or anyone else to buy shares below fair market value -- buying IPO shares during the auction gives you about the same price you'd get on the open market 5 minutes after the auction ends. Therefore, nobody gets "free money" as is usually the case in IPOs. This allows Google to raise money more efficiently which, incidentally, is the point of holding an auction in the first place.

Re:Be Careful: Use Buy Limit Orders

[Frisky070802]

You never know... I put in a limit order for Akamai's IPO at 100, and was excited when I saw it was at 114 until I realized my order never executed. So I cancelled it and stewed, and watched it keep going up the 1st day, only to jump in an hour later at $145. I saw it go up to maybe $345 and put in a stop loss order to sell at $245 on the way back down. (I'd have sold earlier but my wife insisted we not bail too early).

Obviously things have changed since 1999 (or whenever this happened). But while I agree with you completely that a limit order is good for ensuring your exposure is limited, people may want to place that limit pretty high, depending on how desperate they are to buy in. And anyone who is risk-averse should of course stay far away, or at least wait to see how the wind blows.