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Red Hat IPO Details
Wil Mahan writes "Salon has a short article with some interesting details about the upcoming Red Hat IPO. It gives a brief overview of the S-1 filing, including potential "risk factors", such as the threat of being squashed by Microsoft. The full text of the filing is also available (warning: 1.5 MB of legalese). "
Hot IPO shares are doled out to friends of the brokers in the brokerages that issue them. Typically, anybody with less than $100,000 won't get their phone calls returned. If you have slightly more than $100,000 you can ask for 1000 shares and probably get allotted 100. Of course, if you have some real bucks (generate enough commissions that the broker cares), you'll get taken care of just fine. Otherwise, what you need to do is put a limit order out with your broker on the morning of the IPO (9:30 EST). Keep a close eye on things. Brokers like Schwab will dick you over by not letting you trade. They'll make you call them up and do it by phone. The typical starting price is $15. A stock like this should at least double the first day; but could go as high as $50 or more. (It could also go to zero.) The starting bubble should burst with 1 trading day to one week. i.e. go from $100 back down to $40. Don't get caught in this. If you can't get in on $30 and are playing a short term game, then forget it. If you're playing a long term game and plan on keeping the stock forever then keep putting limit orders in for the current price plus maybe a point to make sure you get and hang on. Cancel the order and put in a new one if the price rises and you missed it. Oh yeah; and be sure you only invest money you can afford to lose. What's cool today may not be cool in 2000. If Red Hat is smart they'll hang on to a lot of stock and sell it later at a higher price.
Over the last 15 years big companies have grown at a faster rate than small companies. The rich have gotten richer. Little guy can survive, of course, but flourish? Pass the pipe, it's sure a nice thought.
There are many benefits to the Linux community if Red hat goes public:
You can buy Red Hat stock, theoretically this gives you a say in how the company is run (assuming their IPO is preferred voting shares)
Red Hat must open up it's accounting and other financial details, privately held companies have been know to do stupid things (Like Eatons losing 110 million over 5 years and then going "jeezze, did we do that?").
Hopefully %51+ of stock will be bought by the Linux community, and kept by the community, ensuring to a large degree Red Hat's corporate safety (hard to take over a company if %51+ of the shareholders would rather eat live cockroaches then see MS or similar companies buy Red Hat).
In the corporate world this will greatly help with Linux penetration, as there will (hopefully) be a large, well fed (meaning deep pockets) company available to support Linux, and otherwise make sure things go smoothly for Linux.
Up until now Red Hat has been fanatically GPL, and very supportive of Linux (hiring Gnome developers, etc). And even if they did a 180 turn and decided to behave like MicroSoft the GPL would protect us from that to a large degree.
just my 2 cents.
Distrubuting GPL'd code under a non-GPL license is a violation of the GPL. It would be impossible unless you were looking for a law suit. The GPL is very clear and there would be no defense against a case like that.
There will doubtless eventually be people looking for a lawsuit. And the lawsuit might take down the GPL. All that has to happen is for a few employers to claim the Intellectual Property that their employees contributed to Linux without the employer agreeing to it. Then it'll be time to rewrite those portions of the code, and withdraw from circulation releases using the offending code. The IPO notice clearly states that the GPL has not been tested in court. It will eventually, and some people already think it doesn't hold water well.
According to the assistant manager for IPOs at one of the main offices (anonymous to protect the innocent) of Goldman Sachs (the lead underwriter for the RedHat IPO), they have a minimum opening balance for new investment accounts of US$5,000,000. To be eligible for IPOs, Goldman Sachs also require you to have given them a discretionary mandate for making investment decisions and to have held an investment account with them for at least 4 months. In his words, "we do not need to attract customers to IPOs." This information was accurate on Monday 7th June 1999.
I don't think it makes any less sense to invest in Red Hat than to invest in Yahoo, Ebay, Etoys, Lycos, and the slew of "Internet" companies that haven't made a dime yet.
Don't you realize that the market has been operating on the bigger fool theory for the last 10 years? This is a speculative market, not a logical one.
I would guess (not having bothered to look at the S-1) that the stock being sold has full voting rights. A better way to put the original comment is that, where a large portion of the voting stock is held by a few shareholders and is not being distributed to the public, the voting rights of the publicly distributed stock are not of much use because they can seldom if ever swing a vote one way or the other.
I've no money to buy stock. Indeed I just earn enough for a not so comfortable living. Then. should I still 'contribute' to 'free' OSS so that other great guy can make money out of it?
I would guess a month or two.
You will be highly employable if you're talented enough to really contribute to GNU/Linux/OSS. Expert knowledge of the Operating System, device drivers, applications, tools and development will provide proof that you got the "right stuff". Who would you hire: 1) Some guy that's proud of his MSCE or 2) Some guy that fixed a bug in the TCP/IP stack?
Show me when Amazon or Yahoo have turned a profit. Their stocks have levelled off nicely high.
First, Redhat will probably only put forth about 15% of its total stock in the ipo. After that, all
"insiders" (redhat employees, board members, original investors) will have to hold onto their stock during a "lock-in" period. That's usually 6 months after an IPO (though it was only 4 months for ebay I believe). Getting to over 50% of the stock being publicly traded will probably take a couple of years, so microsoft couldn't gain control that way.
Also, once you own more than 5% of a publicly traded company, you must register that fact with the SEC, so if microsoft started accumulating redhat shares bigtime, everyone would know about it, which would work more to the detriment of micrsoft than redhat.
Finally, if they move to take over redhat, the DOJ / FTC could raise antitrust concerns and veto the takeover / merger.
Anyway, no matter what Microsoft does, if it buys a linux distro, offers its own, or even sells software for it, then We win. Game over. Point, set, and match to the pudgy little penguin.
Public stock isnt voting stock (voting stock is where you have some responcibilities in the company).
Either you're intentionally spreading misinformation or you just don't what you're talking about. Anyway, you're wrong.
Uhhh... What Internet company? Red Hat is definitely not an Internet company. In fact they can hurt by the growth of high-speed Internet access since less and less people will buy their distro in the store if they can download it for free in minutes.
So what we're looking at here is a new economic model. IPOs have already proven that companies with NO real-world assets (ebay, yahoo, etc.) can not only create a great first-day runup of stock price and convert their owners into millionaires, but can sustain, for a time, unnaturally high stock prices without offering (according to standard business models of product/sales) anything at all to a "customer", if you can call the users of the service that.
... especially with the going rate for any kind of corporate software support.
... but they should be able to get by without my $80.
Now, if someone had told me three years ago that there was going to be an IPO for a company that sold free software, I would have fallen out of my chair laughing. I am not so sure anymore. I have paid for copies of RedHat, just for convenience. Several businesses have signed on to support Linux with their applications, and they seem to like RedHat better because it is a corporation and they can feel like they are doing a company-to-company partnership rather than allying themselves with a loose band of developers. I get the feeling that RedHat's support services are going to see a lot more action in the near future, also, and they can take pure profit from that
So, product is in place. Partnerships are being forged. Support for corporate users is there. The only difference between RedHat and a normal software company is that they don't own the license on the kernel they're using, and you can download their product for free. If Netscape can give away software and make money on it, why not RedHat.
Of course, if they're a public profit-taking company, I'm not going to pay for copies of RedHat
I hope people are putting expendable money into these ventures.. when Amazon, AOL, and Yahoo come crashing down (what goes up WILL go down) after the thrill factor of it all has worn off people are going to lose a LOT of money.
it doesn't matter how much MS have bought RH stock. Because, RH is using GPL & LGPL in their product.
For example, if MS have more than 50% of the stock and decided to change the direction of RH by making it proprietary, then RH can't use Linux kernel (since it is GPL), MS in RH must start from scratch to create similar/competing OS product.
Another interpretation might be that GPL'd programs have never before been highly commercialized, nor have they ever been used to replace high volumes of commercial software, produced by competitors with deep pockets.
That day may be coming soon. As the tent becomes bigger, and more people join the circus, there's bound to be a clown joining the troupe who brings with him baggage from a previous engagement.
I don't buy the "it's so good it's unchallangable" arguement. That sort of attitude ATTRACTS lawyers in droves.
Netscape wasn't a case where Microsoft took on a company out of 'paranoia' that they otherwise wouldn't have noticed.
Netscape was a case where a little dink (Marc Andreesen) paraded around loudly claiming he was gonna take down the empire from Redmond. He baited the bear, so to speak. I'm not particulary surprised that he got mauled by the bear.
Of course not. You are stupid to give something away for free so that the big corporations can sell it.
OF COURSE the big corporations like OSS. I would love someone to work for me for free as well.
As for GPL, it is a joke. It is non-enforceable. Imagine if I incorporate some GNU code in one of my projects and sell the binary.
Who is going to catch me? Nobody.
No they aren't. Linux is one of the main OS's (if not the main OS) for doling out web servers. The business model Red Hat is trying to follow is to go for corporate customers and charge a bit for support. An MSDN subscription costs $500/year.
So I'm assuming I should just place money in an E*Trade account and check back to see when the IPO hits. Is that right? Is there a certain time of day that IPOs get released to public view?
If I check at 6am every day will I be guaranteed to see it? Is there a site I can bookmark? Is there any way I can write a cron or anything to get some sort of early warning sign?
I was thinking more along different lines. For example,
suppose RedHat remained the dominant Linux distribution
and corporate favourite, and suppose a couple of years from
now Microsoft attempted a hostile takeover. Once they had
their own managers in place they could do things like:
* Drop Netscape/Mozilla and replace it with a new IE for Linux!
* Snuff RH funding for GNOME and drop it from the RH dist.
* Drop KDE too.
* Replace them with a new windows clone environment based
on a port of MFC.
* Add a Linux port of MS Office.
They wouldn't have to change the kernel, or change any
GPL'd code for that matter. They could just sell the whole
lot as a new improved RH Linux. They'd make money
from the sale, and even though they wouldn't be able to
charge license fees for the bulk of the O/S, they could charge
for 'bug fixes'/upgrades to the windows env and upgrades
to Office. Such a move would go down like a lead ballon
with traditional Linux users. But the Corporate types might
love it, and Joe Bloggs walking into your local PC super
wouldn't have a clue what was going on behind the scenes.
I know
while RH remain a privately owned company, they are safe
from the likes of MS trying to get their claws into their coffers
and management seats. Once they go public, they're
vulnerable.
Macka
In the interim, they're probably meeting with BIG investors to take orders for shares. If those meetings go badly, the IPO can be postponed or canceled.
To get the exact day of the IPO, you have to bug the underwriting bank pretty much daily. There are IPO news sites around the Web that report on expected launch dates.
It's about time ...
Can anybody get me in on the friends and family thing ? I'll take a few hundred shares.
--Aaron
But minimum investment is US$5,000,000!
I was under the impression that some public stock is indeed voting stock. In major companies such as Exxon or Amoco which are almost 100% owned by the stockholders, people who own 5% of the stock pretty much control the company (since most of the rest of the stock is spread out among people who each own less than 0.5% of the stock). Even those who own, say, 100 shares, can vote them, however. When certain critical (and closely contested) votes come up, people on each side will mail the small stockholders (those who own less than 1% of the shares) for permission to vote their shares as part of their bloc.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Sure, they could. But so what? In a sense, Red Hat Linux is not owned by Red Hat, it's owned by the GPL.
The GPL is inseparable from Linux, and no matter what happens to Red Hat the company, Red Hat Linux will remain free.
Posted by d106ene5:
Bottom line is, the balance sheet doesn't mean too much these days (for the present anyway). If that were the case, do you think Amazon, EBay and Yahoo would be worth such staggering values?
Posted by d106ene5:
They never claimed to be a manufacturer of anything.
Posted by mrjp:
If "Microsoft friendly" investors decide to buy up large amounts of shares of Red Hat Inc., then it would make good sense to buy them when they first come out. The price of the shares will surely rise. Microsoft can not "Buy" Red Hat.
Posted by mrjp:
Red Hat, Inc. seems like a great oppurtunity to me. They are the authority on Linux Development, besides Linus Trovalds. Like Yahoo! that has rocketed to unwaivering heights, I believe this company will also be able to benefit from the spin-off technologies of Linux. The future is always uncertain for companies that have the purest of visions, and go against the megaloths like Microsoft. In the end though, I believe that the customer satisfaction will prevail. Who do you think the customer will like better? Microsoft Windows or Linux? It is that simple.
So your "small investors who trade over the Web" aren't likely to get a chance to get in on the IPO.
By the time the "rest of us" get a shot at buying this stock, it'll be so sky high, there will be no way to afford it ...
I'll probably try anyway though :-)
Werd.
what do you mean by "If RedHat goes public"?
Isn't this a done deal?
Maybe I'm confused (this is highly possible).
Werd.
Think about it, if Yahoo, a company that really has no product at all, can hit the $200 mark, why not RedHat. Heres why:
/.ed on the IPO and quadruple in price :)
1) They've already had pretty good success selling a product they also give away.
2) They are synonymous with Linux and Linux is the current darling of the trade press.
3) People are looking for another Yahoo, Amazon or Ebay and will jump on it.
4) The Linux community will buy it because it gives us a real chance to own a piece of the pie and put our money behind something we believe in.
5) The stock will get
The difference between Canada and the USA is that in Canada healthcare is a right and gun ownership is a privilege.
"Lets see here a company that has lost money in 3 of the last 5 years"
The funny thing is that this is actually a strength for an Internet company! It has *made* money in 2 of the last 5 years, compared to most of these companies which haven't seen a dime of profit yet (and don't predict any in the near future either). What a crazy world.
The Red Hat folks have always stated that their business model was non-traditional. I'm sure their IPO will be as well. This is good, IMHO, 'cause it'll introduce a different way of looking at publicly traded companies. Sort of taking the OSS model to Wall Strett :). I hope they make tons of money.
"shop smart:shop s-mart" ash
Anybody have an idea of when Redhat will actually go public or how long IPO applications generally take to process? Are we talking on the order of days, weeks, or months here? I'd really hate to miss this.
-----
Free P2P Backup, Windows & Linux
It looks like it's on the order of a few months. I found a page which explains the IPO process and it says that there is a "cool down" period between filing and the actual offering which is referred to as the "effective date". It also says that the typical cool down period used to be 20 days but now it is much longer. I searched the Redhat application for "effective date" but nothing really made sense - I guess this is something which will be set later.
-----
Free P2P Backup, Windows & Linux
Redhat isn't putting all of they're stock up for sale just a small portion, so there is no way for microsoft to buy that much even if they were incline to.
Regarding the GPL, Redhat does not choose the license under which Linux is distributed, Linus and the other developers chose that a long time ago. If Redhat wants to distribute any code based on Linux they must use the license Linux comes with - the GPL.
I browse with my threshold at 2 so I can't read my own comments :-)
It lists in the "RED HAT LINUX AND RELATED SOFTWARE" section a "Graphical development libraries" GTX, while that should be GTK.
Free Software: the software by the people, of the people and for the people. Develop! Share! Enhance! Enjoy!
Not so strange... it's in the rules.
Although this sounds like a great idea, I think for the amount of $$ they are planning to raise it
would be crazy to hand this over to computer model that has very little experience.
Also, I'm sure they thought twice about handing over their company to a closed source bidding
program. Would that be their style?
If you are raising $10 mil and you are unknown, that might be ok. If you are raising $100 mil...
OpenIPO isn't that different from just a regular online broker. The only magic they have is
that they allow smaller investors to get a random crack at IPO shares (like playing the lottery).
The small guys still get screwed. You can't see the Road Show presentation unless you have $1 mil.
You need to have lots of money available to get shares because you need to bid high for a large
number of shares to increase your odds to a reasonable levels.
For a hot IPO like Red Hat, I image that they would be 20x over subscribed. That means if you
bid for 2000 shares at say $30/share, you would have pretty good odds at getting 100 shares and
paying $20/share. This means you have to be able to afford $60,000 to get $2,000 worth of stock.
If you bid less than that, you probably will have better luck in the lottery.
Although it is true that between filing and the effective date is usually over 1 month, under
current SEC rules it is possible to fast-track and do things in weeks if everything is clean.
The old "cool down" period was part of a regulation to protect the price of the IPO from
manipulation, but nowdays if you follow the rules, things can happen much faster.
The red-herring (which is usually similar to the filing) doesn't have a share price or an effective
date because when you print it, it has to be true (so they don't until they are 100% sure which is
usually the day before the effective date). They just have fill-in the blank spots for this info.
There is no way to know for sure the effective date until it happens (or you are an insider).
However, many companies schedule their road show the week before the effective date.
The investor services that list upcoming IPOs key off the fact that a company has scheduled a
road show to tell everyone that an IPO is coming the following week.
They can pretty much pull the trigger at any time... keep your eyes open
The non-bumpy road version...
:)
Start a company, decide you want to take it public. The first time you sell shares to the
public is called an Initial Public Offering (IPO).
Hire a experienced CFO (chief financial officer)to select an investment banker to lead your
underwriting syndicate. The underwriter(s) are securities brokers that help you take your
company public.
In exchange for money (usually shares in the company) they do the paper work and introduce
you to institutional investors and pay for the road show. They also can serve as "market makers"
for your stock after you go public. A "market maker" owns enough stock to facilitate trades.
(Stocks are trades, so if there is no-one to trade with, the stock is not very liquid).
The reason you want institutional investors (mutual funds, banks, pension funds, etc) rather
than small investors is for several reasons. Because your offering is required to be fair,
you want your IPO all at the same time so that things don't change (price, market, company info).
Also, institutional investors give the company feedback on price support (to select a stable price). Also institutional investors will hold the stock for a while which prevents the shares from being too volatile.
Because of this institutional investor focus, the only way to get in on this is have a good account
with a brokerage that is involved with the IPO. Usually brokerages only allow their best customers
access to IPO shares.
Investment banker and CFO will tell you how screwed up your books are.
Fix them. If they are really screwed up, this could take a while. The ownership, debt, stake
holders, assets, contracts, etc, etc, need to be clear. In a small company this can be a mess.
You negociate the lock-up period for officers and employees (the lock-up period is how long
after the IPO that you aren't allowed to trade in your own stock), this is usually 6 months.
For key employees with lots of shares, some stock could be locked up as long as 2 years.
The executive management team along with the Investment bankers will change your biz plan.
(your plan needs to be investor friendly)
You usually talk to a few other investment bankers about your biz plan to clean it up.
You write a S-1/Red herring which will become a prospectus which says what you're about,
who owns the company and what the all the risks are. You can't add to this later w/o refiling so
you have to get this right. Ommitions are considered lies so you put the kitchen sink into this.
(BTW, it is called a red herring because all the red colored warning bars and text)
You file this with the SEC, at this point you are in a quiet period and can't say anything about
your company unless it is in your filing.
After some informal shopping around the red herring, you either decided to fix it or go ahead.
This is the "cooling down" period.
You select an pricing range.
Schedule a road show with institutional investors to formally present your red herring. You say
exactly the same thing to everyone (it's the law).
Since you want diversified investors, you generally do New York, Chicago, Denver, Dallas,
San Francisco, Los Angeles, all in 1 day (that's why they call it a road show) and a few
conference calls overseas to boot.
Since you can't offer to sell and they can't buy, you get "subscriptions" which indicate interest
in buying. (Usually IPOs are oversubscribed)
You select the actual price.
You pull the trigger and go public. Then the subscribers are allowed to buy (they can always
back out). The amount of stock is usually allocated because of over-subscription.
For instance if somebody subscribes for 100,000 shares, they may only get to buy
10,000 if it is 10x over-subscribed.
From road show to IPO is usually less than 2 days to prevent the possibility of things changing
when you talk to two different people. This is the reason for the roadshow and why it is
impossible for anyone, except good broker customers to get IPO shares.
SEC rules require everyone to be qualified (IPOs are considered risky) and that everyone have the
same info. If you only talk to qualified investors and talk to everyone in the same day
that you sell the shares, this satisfies the requirement.
Now except for the lock-up, the stock is free game for everyone.
In the bumpy road version, repeat steps as often as necessary. Sometimes you can't even hire
an investment banker or a CFO. This could be considered a bad sign
It goes w/o saying if you want to take your company public, you'd better start planning
on day 1.
For big guys, IPO (initial public offering) shares are sold by this arcane process called
:-(
:) (although it is possible)
;-)
subscription. For small guys like us, an IPO isn't any different than any other stock offering.
Just get a stock broker and put in an order to by a certain number of shares at a certain price.
Unfortunately, for an IPO there isn't a price history until it the IPO happens (remember the I
is for initial). There is a range usually given in the filing, but these are just guidelines
and can be changed at any time (and usually up and at midnight before a hot IPO).
If you are daring, just pick a price above the range and put in an order and hope for the best.
If your bid is too low, no shares are available to match what people are asking, and you get nothing.
What you shouldn't do is put in a market price bid for an IPO. You would be pretty much assured
of paying the highest asking price and shortly after an IPO, the price usually drops.
Stock transactions are trades, so a buy order has to be matched with a sell order. To facilitate
trading, stocks are usually handled by one or more "market makers" (usually the stock underwriter for
IPOs). The "market makers" usually own enough shares to put in sell orders to match random buys
and to net out transactions at the market price. This gives them some power to manipulate the price.
In an IPO, the sells come from either the underwriter, the company's investors, or the
subscription shares which you probably won't get because who would sell them to you at such a
low price
The buy orders come from the gullible speculators trying to get IPO shares. To increase their odds
of getting shares, people put in high price/share limits. This of course bumps up the stock price
since the market makers look at the orders and of course pick the highest prices
Usually the day of a hot IPO, the people with shares hold on to them (don't sell) until they see
a few orders. The market maker can put in a few buy/sell orders to test the waters and then things
usually get going (and ususally up). There's a small chance if you put in an order during the
testing stage, the it will get traded but don't count on it! (everyone else has the same idea)
Unless you know what you are doing, or are just looking for token shares, I wouldn't suggest
planning on investing in an IPO.
Admitedly I know little about the stock market and etc... but Whats to keep Microsoft from Buying 50.1 percent of the stock? would this give Microsoft control of the company? Could they force Red Hat to NOT use the GPL?
"The clay can become a bear, but not while it lays cold and wet on the riverbank." -Orson Scott Card, Children of the m
jon
Jonathan Corbet, LWN.net
You may also be interested to see what folks have to say about RHAT over at techstocks.com, here and here. (You might need to register to see these, not sure...)
Hey, that's not too bad... if they've hired an outside company to do Y2K testing on 5.2 and 6.0, it sounds to me like the open source community is getting yet another benefit from Red Hat - third party verification of Y2K readiness of TONS of applications. Not that I expect them to find many problems.
:-)
I bet that outside company loves this particular job, too - "you mean we get ALL the source code to EVERYTHING? Whoohoo!"
I've been meaning to do this eventually to self-manage mutuals, maybe buy some small lots of stock, etc. This is just the thing that tipped those proverbial scales.
I think of it partly as 'vanity stock' - even if I have to wait until it opens to public trading I will buy some stock just 'cuz.
Of note to Canadians - don't fall for the E*trade Canada line - they're not the same and they don't do IPO or commodities. I nearly went the wrong way there.
--- http://foo.ca
Not trying to sound ignorant or anything, but what is this "IPO" thingy? And the talk about "S-1"?
I understand it has something to do with stocks, but I don't know anything about how this stuff works over there. If someone could just expand the acronyms for me it might help...
Go here. A nice summary; well, I assume so, since, like most, I don't intend to read the whole 500 page filing :-)
--
Infuriate left and right
This is all very interesting, but could Redhat be exposing themselves. Once the shares are out there, they are available for purchase from anyone who's a) interested, and b) has the money. Now what if (for the sake of argument) Microsoft, who we all know has a veritable mountain of cash at their disposal, decided to cash in on the new bounty. How would the Linux world react to Redhat if they new that they were part owned by Microsoft? Even worse, what if at some point in the future Microsoft decided it wanted a controlling interest in Redhat and managed to buy up the bulk of the shares. Redhat would effectively become a Microsoft owned company and would Microsoft not then have cart blanch to appoint their own managers and control the future direction of Redhat Linux?
Now I'll be the first to admit I'm not very knowledgable when it comes down to stocks and shares, but this hyperthetical scenario is possible. Isn't it?
Macka
From the article:
Is this true? (I'm sure some of you out there know the answer for sure, and I don't mean just ESR and RMS!)
If so, one way to look at it would be to say that it's completely unenforceable, to the extent to which violations aren't even followed up in court.
Another interpretation would be to say that it's one of the most perfectly enforced licenses in existence--so daunting that nobody's ever really tried to violate it. :)
Better than the law of gravity, that...
-W-
-W-
Is it all journey, or is there landfall?
--Ellison & van Vogt, 'The Human Operators'
That's so strange, that Red Hat would acknowledge their over-commercialization and Linux community backlash as a risk factor. It's true and all, but still strange that a company would list that on a filing!
Yes it would be fantastic!!! And it has already been done before!
Ben & Jerry's did something similar to this when they took their company public. Each family in Connecticut had the opportunity to get in on the IPO for a minimum investment in the low hundreds. The story is detailed in their book "Ben & Jerry's Double-Dip : How to Run a Values-Led Business and Make Money, Too"
So it is possible!
I expect lots of price swing in the first Publicly traded Linux distribution.
Seems like a Good chance to make/loose money!
x
The one thing your forgeting about the small investors strategy is FAITH. Most small investors don't jump on an IPO unless they have a great amount of faith in a company and don't mind paying the initial price for a stock. Sure its not the best investment strategy and any financial consultant worth a grain of salt will not let you invest this way, but then there is the magic of on-line trading isn't there.
Red Hats IPO like so many others is unpredictable so it may be like Geocities back last October. It ran up, the market took a nose dive and you could pick up the shares cheap, then it started to rise and Yahoo bought them so even if you did pick them up at the IPO you made money if you didn't get discouraged. Then again it could be like Ebays and you'll never see anything near the IPO again.
The best advice I can give is if you really really want a specific number of shares buy maybe half or less on the IPO that way you have some, if it acts like ebay, then if it turns down go ahead and pick up the remaining shares a price you think is decent.
Stocks are a gamble, buy what you know, buy what you don't know, just make sure you diversify your holdings so you don't get burned in the long run.
"Imagination is more important than knowledge" -- Albert Einstein
...will go for this one in droves. Lets see here a company that has lost money in 3 of the last 5 years, has a product that anyone can copy and sell cheaper than them, and wants to take on the figurative 900 pound gorilla of the industry. Yep, put the kids college money and the retirement fund in there.. ;)
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Ok, so everyone's happy to analize this thing, but what steps do we need to take to secure part of this IPO? I have no idea...
-Xen
Fortunately, the poor have gotten richer also. That's both why there are so many members of the middle class, and why your great-grandfather's log cabin is not full of his sixteen descendants. Wealth is created, it is not limited.
Lest we forget the recent tendency of IPO's gaining public appeal quickly via "small ideas" like e*Trade, et. al., allow me to paraphrase the words I read in a Newsweek article a couple of weeks ago:
"Investors don't care about the economic risks involved in giving away free software -- they just want to make a fast profit
Six weeks from now we won't be concerned about Red Hat's IPO status -- because penny-rate investors won't, either
"He who questions training trains himself at asking questions." - The Sphinx, Mystery Men (1999)
--
I see this as part of an emerging New World, in which the Little Guys, the individuals, can survive and profit without Big Business. Maybe I'm an idealist, but isn't that what the open source movement is all about? Spirit of demoracy and freedom, and all of that? Maybe I'm just on crack. :-)
No sig.
>> You can buy Red Hat stock, theoretically this gives you a say in how the company is run (assuming their IPO is preferred voting shares)
You are either very rich or very naive.
I bet you're one of those people who votes too...
I would think that the risk of a community backlash would be obvious to anyone who regularly reads Slashdot comments. I'll bet RH would hate to "forget" that risk only to later be presented with pages of slashdot "backlash" example comments that predate the IPO.
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