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Google's IPO Trading Defies Dutch Auction Logic?
TopShelf writes "Today's first-day trading gains for Google may not have just been the result of ambitious day-traders. This story from CBS Marketwatch alleges that Google deliberately set the $85 IPO price well below the true clearing price of their Dutch Auction, and issued fewer shares than expected, perhaps with the intent of limiting supply and assuring themselves a nice runup during the first trading day. In the story's informal survey, winning bidders only received 75% of the shares they should have."
Only 8.5% of the company is now held by investors.
Actually...19.8 * 85 = 1.683 billion shares. Or was that supposed to be "new math"?
Hate to tell ya this, but if you read up on this, they has announced that they MAY do this, it was stated as an option, and everybody ignored it. They couldn't do something that wasn't revealed, so they revealed choices and left it to the investors to decide. That they let the little man in when they knew that the mechanism beforhand was almost guaranteed to cause a pop is simply them trying to "do no evil", i.e. don't screw the little guys that want a piece of the action, but don't give all the money to the big money investors either. It seems that in the end, their actions justified what they did.
May be a 50-50 sort of thing: Short term, they are hoping for a good pop to help the market. Long term, they don't want to give up their good thing and have lots of companies skip them from the process.
Typo, my fault. It's 19.6 million shares (RTFA). 19.6 * 85 = 1666
In the Google prospectus, they state that they can set the ipo price such that successful bidders recieve approximately 80% of stock.
https://www.ipo.google.com/data/prospectus.html
In the event that the number of shares represented by successful bids exceeds the number of shares we and the selling stockholders are offering, the offered shares will need to be allocated across the successful bidder group. We, in consultation with our underwriters, expect to use one of two methods to do so--pro rata allocation or maximum share allocation. With either method, our objective is to set an initial public offering price where successful bidders receive at least 80% of the shares they successfully bid for in the auction. We do not intend to publicly disclose the allocation method that we ultimately employ. Once we choose an allocation method, we will not change it.
Today?
3 hours. Thats three hours from realizing I needed to see a doctor, to making my appointment, showing up, and getting treated.
Thats in Toronto, a major Canadian city. It tends to be well serviced. Now some of the Northern areas have it worse. In Sudbury, Ontario I used to have to wait three or four days before I could schedule an appointment with a GP.
Remember the media is biased, though not the way most people think. It isn't biased to the left or the right. No, the media is biased towards sensation. So when grandma spends 17 hours in the emergency room - thats news. But the other 99 percent of people who were serviced by the health system are not, and you won't hear about them.
I am not saying the Canadian Health care system does not have its problems, but overall, I prefer what we have in Canada.
- sarcasm is just one more service we offer -
There was an error this morning in which one of the brokerage houses let two trades go through early which resulted in the briefly reported $140 price. The NASDAQ announced that trading had not yet begun and it began trading at the opening price of $85 a little bit later in the morning. Since Yahoo's chart likely just grabs the data as it's seen and plots it, fixing this may be a manual thing. You can read about the error here.
Actually, the shares they are selling are NON_VOTING shares, so the pressure is not as great as you think.
Factually, you're completely wrong. But you're basically right.
The shares being sold are class A common stock, with one vote per share, just like the common stock of just about every other company. However, the founders and certain insiders are holding class B common stock, which has 10 votes per share. The net result is that the public shareholders have a very weak voice. In fact, if the Google insiders maintain a united front, the public shareholders are massively outvoted. That was arranged on purpose, because people at Google were concerned about the effect going public might have on them.
They thought about this danger, and took steps to prevent it, at least until the holders of class B common shares either sell or die (in which case the B shares automatically convert to A shares, one-to-one, meaning that what was 10 votes becomes one vote).
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
In Holland, you can get an appointment the same day if required. If you're in a real hurry just go to the emergency room. The one big problem we have with our collective healthcare system is excessive cost. But then again that's a problem US healthcare is not immune to, now is it?
This whole social healthcare vs do-it-yourself discussion always boggles my mind. It's not like you don't pay for healthcare if it's not collectively organized. I mean, I may pay higher taxes than you do, but you still have to pay a significant amount of healthcare insurance right?
You might counter that there is no obligation for people in the US to be insured for healthcare costs, whereas we are. Whether that's a good or a bad thing is left for personal judgement.
One argument for collective healthcare is (I hope I'm recalling this correctly) that people in general are inclined to not take out insurance against events that are unlikely to occur. Noone expects to develop that 1-in-a-million hart condition that costs $500K to treat. This tempts people to not take any health insurance. From a general welfare point-of-view I'd say that is undesirable.
You know their Dutch auction was a total flop: The price was only about 2/3 what they wanted. That price was after cutting the number shares available way back. That means the 23 millionth bid was way way to low, or possibly they didn't have enough bids at all. If they had released all of the planned shares the price probably would have been $50 a share or even less.
Doesn't matter too much. Even at $85 a share the market cap is far to high to be a good buy in my portfolio.
Umm...repeated polls show that somewhere over 70% of Americans want universal healthcare, which is what Canada (and just about every other western nation) has.....
eat shiat and bark at the moon
Otherwise, who gives a shit how often the hypochondriacs go to the doctor? In the US we have enough GPs to handle triage. Sounds like Canada doesn't, to the detriment of their supposedly 'superior' health care system. Hint: it's only superior because they have ours right next door. If China were their next door neighbor I suspect things would be different.
The number of people who cross the border for Treatment in the US is far far exceeded in dolalr value by the americans who come up for medication (some partially subsidized by our gov). Don't be so arrogant. The US does not have the best of everything. The middle class get better healthcare here then they do down in the states. The upper class could care less because they get the same specialists anywhere they go. Also some cities have world renown specialists, for instance Edmonton has some very very good heart surgeons. These doctors could make ten times as much in the states but they stay because their patriotic canadians and love their country.
"There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy."
The way the Dutch Auction worked was that people
indicated what price they were willing to pay for how many shares. Once GOOG decided how many shares to sell, they counted down the bid shares from the highest prices until all were accounted for. Then they sold them all for that value. That means that since they sold for $85, everyone who got shares were WILLING to pay at least $85, and probably more! Since some people thought they were worth $85, while others thought they were worth more, the ones who thought they were worth less sold 'em to the ones willing to pay more, and the price/share went up.
That is largely affected by how many shares the company retains for itsself.
If the founders still control a majority of the shares and don't plan on dispersing them, then all they've really done is allow others to join them on the magical carpet ride, and to raise a lot of money for financing operations.
Wall Street doesn't actually get to say a damned thing about the operation of your business. They can expect things, and the analysts can say what they expect to see happen. Those expectations might affect buy and sell orders. [Which you correctly point out could cause a floundering company to do stupid things.]
As a matter of fact, since no large institutional investors were really involved in this, there isn't some big megacorp who can now say "OK, time to start being evil like everyone else is -- begin the baby-grinding operations".
If you had the scratch you could buy shares in Warren Buffet's company. You sure as hell can't tell him how to run his business because he retains a controlling share.
Now, if they keep dispersing shares and a large controlling stake ends up in the hands of someone who is all about corporate greed, what you say could happen.
But in general, going public to a degree isn't an automatic trip into corporate evils.
Lost at C:>. Found at C.