Google Stock Offering- Sam the Sham?

[fett]

Was on CBS Marketwatch and they let you vote on how much, if anything, you would pay for a share of stock of Google on its IPO. A whopping 67% said they wouldn't touch it. For all the hype, this doesn't look too good for those guys. As a former stockbroker, I wouldn't touch it either. [img]/images/graemlins/smile.gif[/img]

[shreddermon]

Re: Google Stock Offering- Sam the Sham?

I think it's very interesting - and not coincidental - that the biggest critics are also the folks who stand to make the most $ on IPOs. Because Google's auction process will reduce the underwriting houses' "take", which will then filter down to inc. lower stockbrokers' fees.

In general, I consider tech IPOs speculative jokes. And that's probably why 2/3rds of those polled won't touch it. It has less to do with Google, and more with tech bust fears. But I think that Google's being VERY smart, looking out for their own interests. I hope it sets a nice precedent, and shakes up the market "norms" for IPOs.

[fett]

Re: Google Stock Offering- Sam the Sham?

Other than the ability to get shares for their own clients, underwriters don't make that much. It's usually somewhere around 25 cents a share. Where they made their money was on fees and such. I have not seen the offering circular, but I will bet you some "House" will have been paid quite nicely. What is happening to Goggle is the old adage: "It's not nice to fool Mother Nature!!!!!." Institutional buyers will probably shun this deal because it was not done "their way". The average buyer stands a very big possiblity of being hosed. It's just another situation where the big guys, who probably have the shares at 5 cents, are turning the sows ear into a silk purse. A traditional IPO price is supposed to leave room for price appreciation. This auction setup will set the highest price. When the stock starts trading, where will the price go? One more question. How many of these shares are new, providing capital for the company, and how many of these, already existing, shares are being sold by insiders? Finance 101- I have 1 million shares for which I paid 10 cents a share. I want my money. I know, let's do an IPO. Let's be creative. Let's let these suckers tell me how many millions of dollars I will make. Once I have dumped my shares, I don't care where the price goes, because I made a gazillion dollars and they didn't. [img]/images/graemlins/rant.gif[/img]

[shreddermon]

Re: Google Stock Offering- Sam the Sham?

Well, as Diamond Dave once said... "Everybody wants some! How 'bout you?" [img]/images/graemlins/laugh.gif[/img]

Seriously, I think it's the same issue, just from the opposite side of the fence.

All that Google is trying to do is a) maximize price and b) maximize the amount of their IPO proceeds that stay with the company. i.e., As opposed to financing profit/fees/whatnot for investment houses and brokers.

I could care less about Google themselves, but more power to 'em shaking up the "norm". If it works as they hope, I think it's a great thing.

[YetAnotherOne]

Re: Google Stock Offering- Sam the Sham?

I agree fett - I wouldn't touch this one but playing devil's advocate for a moment: If the institutional buyers skip out because they don't like the format, they'll almost certainly be back to buy in the future because Google is the clear leader in its field. That leaves a *lot* of potential appreciation on the table for the individual who buys in now because, as we all know, the institutional guys drive the price. If they skip out in numbers now the IPO price will be artificially low even given the auction format.

Re: Insiders selling their shares at the IPO - I don't recall my Securities Law courses very well (probably because I never practiced in that area) but I seem to recall a dead period both before and after IPOs where insiders are locked in (90 days on each side? 120 maybe?) and are prohibited from buying, selling & exercising options. Or am I confusing this with something else? It's been too long.

[fett]

Re: Google Stock Offering- Sam the Sham?

The offering circular will tell you what type of shares are being sold. The quiet period applies to, I think, already trading shares. Since this is an IPO, there are no existing trading shares. I contend the institutions will wait and pick these shares up when the price declines. They are too smart to jump in quickly. Let the public overprice it and then find out the only people they have to sell the shares to are the big boys at lower prices.

[OnlineStageGear]

Re: Google Stock Offering- Sam the Sham?

Anyone remember when Linux made it's IPO on the market. Opened at $35 a share and ended the day at $200. Les than a year later the stock was trading under 35 cents a share and I think it got yanked from the market.

Matt

[fett]

Re: Google Stock Offering- Sam the Sham?

In this deal, it will start at $100+ a share and then go to hell in a handbasket. You see how crafty these Yahoos (oops, wrong company) are. They will cash out at the top. 11.5 million shares of the 25 million are being sold by existing shareholders. The company only gets the money from the "new" shares they are issuing out of the 25 mil. [img]/images/graemlins/mad.gif[/img]

[finnman]

Re: Google Stock Offering- Sam the Sham?

[img]/images/graemlins/scratchhead.gif[/img] [img]/images/graemlins/sleep.gif[/img]

[fett]

Re: Google Stock Offering- Sam the Sham?

[ QUOTE ]
[img]/images/graemlins/scratchhead.gif[/img] [img]/images/graemlins/sleep.gif[/img]

[/ QUOTE ] From the Bay Area, huh. I would think it would be the talk of the town there [img]/images/graemlins/scratchhead.gif[/img] Oh, well [img]/images/graemlins/headbang.gif[/img]

[YetAnotherOne]

Re: Google Stock Offering- Sam the Sham?

[ QUOTE ]
They will cash out at the top. 11.5 million shares of the 25 million are being sold by existing shareholders.

[/ QUOTE ]

I haven't been following the story closely but is this why the feds said that a bunch of the sales were going to be illegal and put the brakes on the thing?

[finnman]

Re: Google Stock Offering- Sam the Sham?

haa-- fett
Sorry, it's just You guys are way above my head in this stuff.
[img]/images/graemlins/scratchhead.gif[/img]= I don't know my left shoe from my right.
[img]/images/graemlins/sleep.gif[/img] = what did you say? [img]/images/graemlins/cool.gif[/img]
I'm sooo mad at any stock right now. I work for United Airlines, We all HAD at least $90,000 in our ESOP stock option untill they (UAL) filed for chapter 11 almost 2 years ago. All we got out if it was $13,000 cash.
Muther fuc-kers just piss me the f u ck off.
I wish I knew about the stock business like you guys.
Sorry to make the stupid post earlier !!
Finn [img]/images/graemlins/confused.gif[/img]

[fett]

Re: Google Stock Offering- Sam the Sham?

You have every right to be mad. I used to be a stockbroker and know about this stuff. You, on the other hand, have a real job. The UAL story is a long and sad one, and all you did was your job and you still got hosed. [img]/images/graemlins/rant.gif[/img]

[fett]

Re: Google Stock Offering- Sam the Sham?

[ QUOTE ]
[ QUOTE ]
They will cash out at the top. 11.5 million shares of the 25 million are being sold by existing shareholders.

[/ QUOTE ]

I haven't been following the story closely but is this why the feds said that a bunch of the sales were going to be illegal and put the brakes on the thing?

[/ QUOTE ]There are two reasons for a private company to have an IPO. The first and most significant reason is to raise capital so the company can grow. This is equity and belongs to the company. The second reason, and in recent years the more dubious, is for the founders and the venture capitalists to cash out. As you have seen in recent years, the small investor gets left holding the bag. Google may be getting just a little too cute with this deal and the Feds are watching with great interest. [img]/images/graemlins/confused.gif[/img]

[fett]

Re: Google Stock Offering- Sam the Sham?

(There is a supply overhang. As early as 15 days, Google will make available 4.57 million shares. After 90 days, there will be 39 million shares eligible for sale. After 120 days, there will be 24.8 million shares available. After 150 days, there will be 24.8 million additional shares available. Finally, after 180 days, there will be 170.7 million shares available) I got this off an article CBS Marketwatch. See how many shares there really are? All these millions of shares already exist and are just waiting to be dumped. [img]/images/graemlins/smile.gif[/img]