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They should have just given the EPS, sales, growth rates, market cap of rivals like Yahoo and then let the investors decide.
$10 or something around $100?
In many cases people's percetion of value is influenced by 'experts" and most people will start thinking the value is around $100-$125 - somewhat lower maybe but not in the range of about $10.
Same goes with other things too. if a diamond has "appraised" value of 1 million dollar - how much would one bid to have a fair shot at getting that diamond? around half a million dollars or $10?
These guidance prices are to trick people into perceining these to have high value around the guided values and thus making them pay more than what they would do if not provided with such info.
Anyone that doesn't understand that you can bid whatever you want - or how a dutch auction works - shouldn't have bid.
None of this is complicated.
Even if you did bid wrong - you wouldn't pay more than the highest price all the shares could be sold at. I doubt that the small group of people that fall under this category would change the price much if at all.
I don't see what the big deal is - people don't like change? They don't like an auction?
The new price is IN LINE with analysts estimates. It corresponds almost exactly with the price Chndru brought to our attention in this post:
The fact that google was hoping for more is not suprising. There has been much talk about this IPO - and plenty of firms seemed to think it was possible.
Google will have saved millions of dollars in fees using this auction process which seems like a better way to allocate stocks to me. If google goes out of business - and the only thing they change is that process - I think it will have had a positive effect on the world of finance. That a few well connected people should be the only people to get in on an IPO - is not fair.
Google wanted to sell their share at $135 a piece - I wanted to buy them at 35 cents. We will meet somewhere in the middle.
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.
Problem is - are Yahoo and AskJeeves really worth it? I don't think so, but it so happens that current stock holders are okay with it, for now.
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.
Technically correct, but I think they used "Google" as a collective word which would take into account all people who sold Google stock - investors, employees, Google itself etc.
Those investors are still going to cash out, just not on day one. So with the market demand of $85-$95 with 5.5 million shares, what will it be when all 11.6 million are out there in a few months?
I would guess that the stock will plumet. The question is what does the supply and demand curve look like - if it has a slope of 1, then the stock is going to drop 50% within a few months - and I think that is optimistic.
Just lowered all my bids by over 50%.
what will it be when all 11.6 million are out there in a few months?
There will be a lot more than 11.6 million shares. Google will have a total of 271 million shares.
These investors are not stupid - they won't dump their stock all at once.
Decreasing the amount of shares available on day one from 25.7 million to 19.6 million is not that big of a drop percentage wise when you take into account all the shares available.
... and doubt they will.
added... okay, I'll eat crow. SEC just approved the IPO.
[edited by: bobothecat at 8:09 pm (utc) on Aug. 18, 2004]
Can't imagine anyone raised their bids after this news.
I think some people will be seeing the 85 - 95 as converging more on the true price and also as what the bids seem to be showing. I think people that were willing to bid $120 for some shares may lower their bid, but those that were willing to pay $75.00 a share, might be willing to submit a bid for more as to not "miss out".
People should rely on their own valuation of the company in submitting their bids, but I see this as paring down the bids from both sides.
I don't think people that were bidding $75.00 will be as likely to lower their bids to $65.00 as people that were bidding $110 will be to lower theirs.
People that were bidding $75.00 were not really paying attention to the guidiance google was giving. They came up with their own valuation and submitted a bid.
People bidding in the previous range may have relied on google's estimates in the hopes to get some shares.
Just my 2 cents.
A 3 shares @ $100
B 2 shares @ $90
C 4 shares @ $80
D 1 share @ $75
E 8 shares @ $60
F 9 shares @ $50
They start at the top and count down 10 shares, which arrives at D. So A, B, C, and D get shares at $75 a share. E and F get nothing.
Now if Google only offers 5 shares, then A and B get shares, but at $90 a share.
So by cutting the number of shares, they have effectively increased the price per share. The price would have been even lower if they had not cut the number of shares.
[edited by: Xoc at 7:22 pm (utc) on Aug. 18, 2004]
I think it is a material change as you point out, but think many people will redo their bids. I don't know if the two will cancel themselves out.
Think about it:
A: 3 shares @ $75 = 30%, or $2.50 per %1 of the company
A: 3 shares @ $90 = 60%, or $1.66 per %1 of the company.
If you stop thinking in terms of shares and start thinking in terms of percentage of total shares (or percentage of ownership in google), you realize that google is not making some clever math trick to come out ahead.
No doubt. But Im still betting this is overvalued. How many IPOs where the stock is worth more now than when they went public?Why would Google buck this stat?
I can see the shorts all over this one. Widely held=lots of float to borrow from.
You have to realize that the publically traded shares are not all of the shares in the company, just the number that is being publically traded at the IPO. There are other shares that are held by employees and the company that are not going into the IPO. So without other information, you cannot calculate what percentage of the company the winning bidders are taking. I think, most likely, they wind up with the about same percentage regardless of the price and number of shares issued.
The other shares can come on the market at almost any time for the current price. So while Google will reap fewer total dollars now, they still have the shares that they haven't issued and can issue the additional shares at any time in the future. If the price doesn't tank, they could still make more dollars by issuing the other shares in the near future, having propped the price up by cutting the number of shares at the IPO.