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Google is a different kind of company, Brin and Page said. We're more honest. We're not going to cater to Wall Street. "Many companies going public have suffered from unreasonable speculation, small initial share float and stock-price volatility that hurt them and their investors in the long run," they said in their filings. In other words, we won't play the cynical Street game of selling a handful of shares at a below-market price so that our stock runs up from the get-go.
Take the IPO. It was supposed to be an auction matching buyers and sellers -- but it wasn't. Google sold the stock at $85, it immediately ran to $95 and then to $100. While bidders for five shares got all the stock they wanted, big bidders were shorted by 26 percent. This means Google could have gotten a higher price for the shares it sold, or else sold more shares at $85 than it did. Can you spell "artificial scarcity"?
Then came last Tuesday, when Google's so-called quiet period ended and stock analysts of firms that had participated in the offering were free for the first time to offer recommendations. Surprise! All five gave Google high ratings, even though it was a far more expensive stock than at the IPO just six weeks earlier, having risen almost 40 percent. Why any investor took these opinions seriously is a mystery to me -- but the stock soared around 8 percent. It's as if people have forgotten the whole unseemly spectacle of analysts' hyping stocks their firms helped underwrite. Does anything ever change? Maybe not.