Forum Moderators: goodroi
IMHO, this is a disaster.
> Does his mean that the slow demand of their
> stocks lowered the true market price of this IPO?
Not entirely - no. It means they had some rose colored glasses on when they talked about the expected prices. The big surprise is the cut in shares offered.
Google Inc. slashed the size of its closely watched initial public offering nearly in half to less than $2 billion on Wednesday, splashing cold water on what has been touted as the hottest Internet IPO in years.Google Inc. slashed the size of its closely watched initial public offering nearly in half to less than $2 billion on Wednesday, splashing cold water on what has been touted as the hottest Internet IPO in years.
The revision came as Google disclosed in an amended filing that the U.S. Securities and Exchange Commission has asked for "additional information" about the publication of a Playboy magazine article featuring an interview with Google's co-founders.
The IPO of the world's most popular Web search engine is now slated to raise as much as $1.9 billion, far lower than its previous size of as much as $3.5 billion. Trading could begin as early as Thursday.
[edit]Can't get the link to work so I just pasted most of the article[/edit]
Of course, the Google spin is that "due to the lower share price, they decided to sell fewer shares." The implication there is that they could have sold more at $85 if they wanted to. I doubt it.
Wow!
They are not going to have near as much cash as they thought they would. It was a mistake to go public at this time of economic turmoil. Big mistake!
I just never believed that the value would hold and I guess it is better to see it happen pre-sale, than months afterward when millions would lose millions.
Just mho
Also if the company had been making plans for spending X billion, having half that sort of changes plans, don't you think?
Finally, it ain't so much where the price is at moment one after the IPO. To those who have their shares locked up, it's where the price goes from there.
Their problem wasn't releasing too many shares at too high a price, it was that they were releasing too few shares at too high a price
It's just a matter of image and presentation.
People don't tend to associate a "share" with what % of the company that the share actually represents. They just see the price. Emotionally, it's hard to justify 135$ a share (or now 85$ - 95$ ), when you can go and buy into microsoft for about 27$ a share [finance.yahoo.com].
It doesn't matter that there are zillions more outstanding shares for microsoft. The initial gut reaction is:
"Google, small indy company with a neato search engine and a cool attitude, 85$ a share. Microsoft, big bully ugly america company that's huge, unstoppable, and owns the desktop, 27$ a share. I think I'll buy into the bully."
If google had of double split their shares (increasing their number 4 times), that 135$ initial price range would have been around 33$ - 34$ a share, and far more palatable. The total value would have been exactly the same, but from a perception standpoint, it would have seemed like a bargain.
But no, they've locked in their initial number shares now, so any cut in price just makes them look weaker and less stable, and helps to worsen their overall public percetion in the eyes of the market.
I think Google, and whatever crackpots have been advising them, have done nothing but fumble, stumble, and generally make fools of themselves during the entire process.
Which simply does not make me want to invest in them. No matter how much I like their product (which is a lot).
In the auction the price was supposed to be set at the lowest price that all share could be sold. By reducing the number of shares available have they effectivly increased the price being taken? Although lower number of shares=higher price?
By reducing the number of shares available have they effectivly increased the price being taken?
Exactly! They just could not afford to float at much lower price as it would make it look like total disaster. Founders probably took the brunt of share-cutting since they stood to make lots more money anyway. Suprised it was not pro-rata cut however. Either way it does not promise good start in trading and certainly does not indicate that issue was oversubscribed big time (something .con's liked to brag about).
So by trying to help the small investor, Google price suffers. Long term, the price will settle where it belongs. I personally think that Google has a lot going for it from the brand point of view. Look at Nike, they make golf balls, and they sell well based on the swoosh. A strong brand.
Google could very easily release a Google Browser or a Google travel site and people would use it. Do you think for an instant that anyone would go to Expedia or Travelocity if the same functionality was available at Google. Brandwise I think there is not much comparison.
What google does with their brand is their business, but I do not see them going for the fast buck. I do not see them disappearing either.
TGN
Awesome honest reporting.
They talk about capitalisation - not only price was slashed, but also the number of shares on offer. Here is quote:
The cuts mean Google will raise about $1.8 billion in the sale, down from an originally expected $3.5 billion.
Pretty honest reporting, if there was one :)
IF they get $90 a share - they are still getting people willing to bid at a huge multiple to earnings.
That is if people don't go back and readjust their bids (which I think many will).
If their estimates are correct - then it would still make Google a 23 - 25.8 billion dollar company based on market cap. This is more than almost anyone was willing to predict a year ago.
This would put google in the same ranks as Ford and Unilever. They would be in the top 200 companies in the world based on market cap.
Yahoo has a market cap of 38.16 Billion
Ask Jeeves has a market cap of 1.44 Billion
I think to say google is worth at least 16 times Ask Jeeves and at least 60% of what Yahoo is - isn't to far out of line.
If they get $90 a share - or even $70 a share - no one at google is going to be crying.
The average Per Share Price to people at google was 35 cents. Getting 200 times what you "invested" is not a failure by any means.
DON'T BE EVIL
"but heck - the price is all wrong"
"But we're still not being evil!"
"Sure - but how do you set the price, and *still* not be evil?"
"Ha - evil is such an extreme term. You can do pretty well what you want under this mantra - and still be cool!"
"But you're not cool - and we can all see it now."
"Agreed - we're no longer cool.., but for f*cks sake don't tell the investors"
The cuts mean Google will raise about $1.8 billion in the sale, down from an originally expected $3.5 billion.
This is wrong. Google INC is still selling the same amount of shares. Some of the stockholders are selling less shares - The shares being offered by google themselves is staying the same.
BEFORE
Google Inc. is offering 14,142,135 shares of Class A common stock and the selling stockholders are offering 11,555,394 shares of Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders.
AFTER
Google Inc. is offering 14,142,135 shares of Class A common stock and the selling stockholders are offering 5,462,917 shares of Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders.
BEFORE LOW $1,527,350,580 HIGH $1,909,188,225 AVERAGE $1,718,269,403
AFTER LOW $1,202,081,475 HIGH $1,343,502,825 AVERAGE $1,272,792,150
Exactly grelmar...This is the first i posted here when they announced the price range months before...
Companies do stock split just to give a perception that the stock is still cheap ...Google thought they can be different and can be another Berkshire Hathaway . But they forgot even BRK started small!...They should fire those nutcases advising them .
You dont want to do so many mistakes at the same time :- pissing off the big wallstreet boys and doing stupid mistakes like the price point , illegal share sale, playboy interview etc etc
So much for the auction where the investor determines the value of the company. Seems like if you declare that you are going to auction off x number of shares to make it fair to everyone, then they ought to do just that, not change the rules in the middle of the game.
On the other hand, since those numbers are just guidance, it could still roll out at $50.00 a share or less and probably would have if the number of shares had not been cut.
If the auction is still open, it couls end jitters through the folks who do have bids in and cause them to lower even more.
