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E-Trade backs down, lets Red Hat IPO folks in
Bowie J. Poag writes "First it was "The eligibility profile will have no bearing on your ability to participate." Then, it was "Sorry! you failed the eligibility profile since you dont have half a million in the bank and 20 years trading experience. Bye." Now we've come full circle, thanks to a great deal of flames from the community.. E-Trade is backing down and letting us in. "
There is a very big difference here between the Red Hat IPO and the various other "internet" stocks out there. Red Hat has some actual assets. They actually sell something. They are more than just some portal web site or something that deals entirely in the abstraction that is the web and banner ads.
And, they are the best positioned company, at least in the popular press's eyes, to give Microsoft a run for it's money. I wouldn't be surprised if Microsoft somehow managed to make sure that Red Hat did well, simply to foster the notion that there is OS market competition on the Intel/x86 platform.
BULL SHUCKING FIT!
I can go to Las Vegas and put every cent I have on one spin of the roulette wheel. I can give all that I own to a televangelist (praying for that hundred-fold increase). I can buy tickets in a lottery run by my state. But I'm not can't invest in the stock market because I'm not QUALIFIED? What a load of CARP!
One way is to look at the block trades for the day, how many there are and depending on where you get your information they may even have whether they are buys or sells... the more block trades on the buy side the better chance it may be an institution..i.e. business account.. that will hold on to it for a while and not day trade it.
I'm lucky, I work for a major brokerage house and have research , real time qoutes on all listed stocks and other brokers to talk to and gather information from. Its a little harder on line but if you watch the major investment sites like Motley fool and Raging Bull or thestreet.com you can probably find that information there for the most part.
Or you can hire a broker to do it for you, most places don't charge a fee unless you trade. So a good way of going about it is to try and start a relationship with a broker.. whether professionally or find a broker with similar personal interests.. Believe me the nerd/geek brokers exist that hack on computers on their off time.. and then just start milking him for info. If you like him enough open an account if not use the valuable info and trade on-line. Be careful though milk them to much without establishing an account and they will dry up after awhile.
"Imagination is more important than knowledge" -- Albert Einstein
Believe it. I was given the opportunity to take the test a second time, and was indeed told that E*Trade didn't check anything, and it was indeed implied that I could lie, and E*Trade wouldn't know the difference
I was _NOT_ offered reassurances that I would pass the second time; the person who wrote the report did some interpretation of their own, and added their own spin.
In fact, I didn't pass the second time; I'm not going to lie just to get in on this. End of story.
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In that case, it's hardly worth buying, unless you expect the company to do exceptionally well over the next few weeks.
Take for example, BeOS. It IPO'd at $6/share, surged to $10/share, and is now at around $6.50/share. If you could sell on the first day, you could be rich. If you had to hold onto it, you made virtually no money. If you couldn't get in on the IPO, and bought it at the market opening price (around $7), then you lost money.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Well, both Be, Inc., and Mp3.com sell stuff. Be sells its OS, and mp3.com sells CDs of its artists. Neither of their stocks is doing well.
However, neither Be, mp3.com, or Red Hat turn a profit.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
FYI,
..Their answer was "Technically, no. However, if we found out about it, we would probably freeze your assets, recover any money you made from the IPO, and possibly get the SEC involved." Now, E-Trade says "We dont perform background checks."
The very day I recieved my IPO invitation from Red Hat, I called E-Trade's Red Hat IPO Hotline and asked them a series of questions..One of the questions was, "You realize, that pretty much all of us are 18-24 year olds with very little money, very little trading experience, and very little net worth...How is this "eligibility profile" going to affect our ability to participate?" , and I was told by no less than three separate operators that day that the eligibility profile would have absolutely no bearing on our ability to participate. That story quickly changed within the next 2-3 days to, "Sorry, you wont be allowed to participate. SEC rules."
When I began to hear stories of people being rejected via the eligibility profile, I called back and asked "Is there anything legally binding us to tell the truth on this eligibility profile?"
E-Trade is not giving you permission to lie. I dont think E-Trade is a bad company either.. I just think they got caught with their pants down when trying to handle all of us. No big deal, shit happens, and E-Trade is well within their right to change their mind..either in our favor, or not in our favor.
Given all the noise about this eligibility profile, I've held off on indicating my interest, in hopes that E-Trade would clarify their stance on the issue. Thankfully, I dont have to indicate my interest until August 7th, which give the situation some time to develop. When I do fill it out, i'm not going to lie, either. I suggest you do the same..There may be hell to pay if E-Trade *does* decide to start looking into your financial history.
Bowie
Bowie J. Poag
"In no uncertain terms, he proceeded to tell me that ETrade did not do background checks, would not attempt to discover if I lied, and implied that if I thought about it, and was willing to lie, I could fill out the form in such a way that it would accept me," Sparger said.
:)
Wink, wink. Nudge, nudge. This is the way it works, apparently. *Everyone* lies.
Give me a break!
Werd.
Nor are these the only tech stocks plunging. According to several articles I've read, tech stocks are collapsing in value, especially Internet stuff.
In an environment of doom, gloom, and rush selling, I don't know whether buying into Red Hat right now would be a wise move. Sure, if things pick up, just before the IPO, those putting their money in will earn a small fortune. Red Hat is one of the few companies making money, and has a good public image.
On the other hand, I can't help but suspect that bargain-hunters will be able to pick the shares up for less, the following week or so. When the shareholders panic, they've all the wits and wisdom of lemmings. Only without the cuteness quotient.
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
Now - if you were screened out the first time due to financial background or trading experience, I don't want to hear a single complaint about how you lost your money on this investment. Kapisch?! :) (Of course, I hope no one loses... but I really don't know how this thing will go!)
Well, it's good to the hackers are the only ones who suffer from News Media Term Re-Definition Syndrome.
I suggest we make a new name "The Wired Effect" for overloading websites linked to by /.
snafu
1) Call them and ask them these questions. If you got the Red Hat letter, call the number listed there. They were very helpful to me.
:-) I wouldn't be surprised if this prices at $14-$15 per share, sold in 100 share lots. And I assume that there's a fee for the transaction, as well.
2) You should have had more than a week... the Red Hat letter was dated 7/20, and you have until August 4 to have a funded account and make your indication of interest. Do this from the URL that was mentioned in the letter. If you didn't get the letter, don't cheat, because E*Trade will block you from ever participating in any IPO with them again.
3) You can probably fax in your application and wire the necessary funds to speed things up and avoid the USPS.
4) $1000 isn't gonna get you jack.
I think the point here is that they're trying to cover their own asses.. If you lied on your signup form, you don't exactly have a strong case if you lose every last cent of your money because everyone decides Mandrake really is a lot cooler than Red Hat next week. ;) They also may be aware that free software developers aren't exactly the most litigious bunch to start with anyway.
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I've seen a lot of people complaining that they couldn't get things done in time, couldn't find the link, etc. If you're serious about this, and you're having problems, then CALL E*Trade! There were some problems with their web site, etc. The phone support was helpful, and they were able to take care of all the problems I encountered. I ended up talking to a broker rather than using the web site. What a concept. :-)
You were not offered stock. You were offered the chance to apply for participation in this IPO, subject to all the standard rules and regulations of the E*Trade corporation and various governing bodies. What made this offer special is that you are in a smaller pool of applicants, making it more likely that if you are eligible, you may actually receive an allocation. It was stated in the letter that you would be subject to screening based on your financial background and investing experience, and a link was provided so that you could see exactly what this screening would entail.
Oh, and look at that. It seems that all the bitching and whining has had an effect.... E*Trade backed down!
I wouldn't say that they backed down - they gave you a chance to "correct errors" on your screening application. Their ass is still covered.
Yes, but the basic rule of the market is, that if alot of people are trying to buy, and few selling, then the price goes up. Alot of people trying to sell and few buying, the price goes down. If most of the initial purchasers hold onto most of their stock then the price will rise until it reaches a point to where the price is high enough that people want to sell. If most of the initial ipo purchasers keep their stocks for close to a month without selling such an action would push the price up, even to the point of causing the stock to split, which can help the stock in the long term from falling too low.
>Remember, there is a buyer for every person selling (they just might not be willing to pay as much).
I don't think I'd say that. There are companies that "make a market" in certain stocks ( I think this is called arbitrage ). That is, they buy up shares when there are more sellers than buyers, hold an inventory and then sell to meet demand when there are more buyers than sellers.
At least, this is how I thought I understood that this works.
They reported a $130,000 loss for 1Q 1999. That's a quite small loss compared to most internet-related companies, but it's still a loss.
I don't know if they turned a profit in 1998 or not.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Simple... when the stock price falls to about $.01 a share and Joe Linux Geek looses all his money, then he can't hold them liable.
"But he SAID he had lots of expereince and could afford to lose money! It's not OUR fault!" And so they have their asses covered.
It's not about honesty, it's about liability...
How do you figure that? They didn't change any policies or procedures, did they? They are just letting people have another shot at *beating* the form with the 'right' answers. The only thing that is significant is that they are willing to look the other way to let people misrepresent themselves on the questionaire so they can get past the established policies. To me this just seems like damage control since they were in the midst of a huge PR backlash. Maybe I'm too cynical, but I don't see where the magic of the OSS community broke down any barriers or that any "silly or irrelevant" practices have been abandoned as a result. The questions and screening criteria are the same, you just have a second chance to change your answers to get past the 'cut'.
/. completely so I don't have to see all the bitter complaining from everyone who sold their VW bug to scrape up $2000 to get in on the IPO only to watch it lose 50% of its value overnight (biting my tongue, hope it doesn't happen, but it *could*).
I hope this IPO goes well and a lot of people aren't burned. But, in reality, this is very risky (as are most IPO's) and a lot of people could really lose out. Me, I plan to wait for a couple weeks and see where the market prices this. If it goes to $50 an stays up, oh well - I missed out. If it goes to $50 in the first day, then settles back to $20 over the next week, I'll grab some and hold it for the long term. If it tanks to $8 after two weeks, I'll avoid
Damn, I can't stop replying to this thread...
Well, anyway. Let's try to clear up some more misunderstanding.
Red Hat is having an IPO. They are issuing public shares for the first time. Some people will be able to get in at the initial price (currently estimated at $10-$12 per share) which is set before the stock trades publicly. Often, this price is significantly below the price that the stock will see on the first day of trading. On the first day of trading, anyone and their dog can buy shares by calling their broker or clicking their browser.
You did not need to get "the letter" in order to get in on the initial price. E*Trade customers and customers of other brokerages also have this opportunity. However, Joe Blow E*Trade customer will be competing with thousands of people for an allotment of shares. On E*Trade, it used to be first-come first-served, but now it's a lottery system, with shares allocated in 100-share chunks.
However, Red Hat has set aside 800,000 shares to be "directed" to the open source community. That's what the letter did - it gives you a (possibly) better chance to actually have shares allocated to you out of this pool, rather than the general public pool. It guarantees that up to 8,000 people will be able to purchase at leat 100 shares each. Of course, you must be eligible to participate in the IPO in the first place.
Getting the URL, the phone number, or the password from the letter will not help you out if you didn't actually receive the letter. E*Trade is screening for this - they know who Red Hat sent the letter to originally. If you try, you will most likely be barred from ever participating in any IPO through E*Trade in the future. Them's the breaks.
Doesn't anyone value honesty anymore?
Not in the finance industry, I guess. The loan officer for my mortgage (who was working on commission) taught me how to, ahem, overstate my assets without getting caught by her colleagues on the loan approval committee.
I got the loan, and seven years later, I haven't defaulted yet.