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Google's IPO Trading Defies Dutch Auction Logic?

Posted by CowboyNeal on from the opening-day-hijinks dept.

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."

3 of 349 comments (clear)

  1. A good idea? by Anonymous Coward · · Score: 5, Interesting

    Glad I'm not the only one who suspected this.
    I think the strategy could actually backfire on Google - since decent short-term gains are now attainable, many bidders will cash out early (a scenario they were hoping to limit via the Dutch Auction process).

    Just MHO, but it'll be very interesting to see where the stock heads in the coming weeks.

    1. Re:A good idea? by steve_ellis · · Score: 5, Interesting
      I believe the idea of the Dutch auction process is to allow regular people to participate in the IPO. Normally on an IPO this hot, only 'high-rollers' associated with the offering brokers would get a shot at buying at the IPO price.

      Also, with this technique, Google gets a _lot_ more money--to their credit (well, actually it is also in their best interest), they did leave enough money on the table so that people would want to bid for the auction.

  2. GOOG for the masses by trolman · · Score: 5, Interesting
    In the story's informal survey, winning bidders only received 75% of the shares they should have."


    It is very uncommon in an IPO to get even half of the bidded shares.


    CBS marketwatch is just going along with the unhappy crokers / brokers that are not receiving their $1/share commissions because the Google guys decided to let you and I have a fair shot at investing in GOOG via a true public auction.