points by davidguetta 1 day ago | 0 comments
can someone explain to me the point of the 'initial valuation', considering ultimately the price will settle lated thorugh trading to perceived value anyway ?
[–] neeeeees 1 day ago
[–] selectodude 1 day ago
Sort of. IPOs are always undervalued because the entire block of shares gets purchased by the investment bank at the banks decided IPO price but then bears the risk of selling them at or above that price.
[–] ImPostingOnHN 1 day ago
The price will settle, but it has to start somewhere.
The trading price you see on the screen is - shortly afterwards the shares become publicly tradable on the exchange (or on all US equities exchanges, for US stocks). So in effect, the price shooting up on the public markets is actually bad for the company in that they might have left money on the table.