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Overstock.com's stock auction raised nearly $40 million, a pittance compared with the $2.7 billion Google hopes to raise.
Yet, for potential Google investors, the tale of Overstock.com's initial public offering gives a hint of what to expect in the coming weeks: The trickiness of bidding, including ridiculously high bids by those trying to ensure themselves some shares. The rush of activity on pricing day. And the sobering lesson that even in an auction IPO, pure math alone probably won't create Google's IPO price.
At the same time, the differences between Overstock.com's deal and Google's approach -- at least what's known about it so far -- raise an overarching question: Will Google live up to its promise as the egalitarian IPO for the people?
Overstock.com gives a lesson on what could happen to Google [kansascity.com]
Unfortunately no comparison here. And as far as I am concerned it is a pleasure to see that the hype surrounding overstock is just that- hype.
It is the billion dollars in revenue which provides G's golden parachute in what will be the latest round of Internet IPO's.
Irrational exhuburance is now replaced by cautious optimizism as investors look towards the bottom line and not unfounded forward looking projections for guidance.
Typical IPO fees generated for the underwriters is close to 7%, the rumor number for the dutch auction is 3%.
4% of 2.4 billion, a lot of money, ticking off every investment banker on Wall Street, priceless.
The trickiness of bidding, including ridiculously high bids by those trying to ensure themselves some shares. The rush of activity on pricing day.
There have to be some out there who must have that Google stock no matter what. There's an undeniable charisma and widespread emotional appeal for Google, and whether it's common sense or not, there are a certain percentage of people who can be sold investments based on sizzle. In this case there's no salesmanship needed. Sizzle sells. It's more than likely institutional investors that might possibly hold back.
Overstock.com had publicly recommended a range of $12 to $16 to potential bidders
And it ended up that the demand for the stock was at $14.00
Pretty good guesses.
There are plenty of people out there willing to bid high prices to get some google shares, but this is billions of dollars. At some point it would be come to overvalued - and people that can put in the millions won't be able to justify it.
Whatever google goes for it will be more than it is "worth", but the fact that it has the demand to go for that much - in part - makes it worth what it is.
As far as the actual process goes. I have a feeling it will go much smoother and better than any auction like this in the past. Google will not - IMHO - start a new craze in IPOs. But they very well may lead the way in the auction format being the most popular.