Reading this brought me back to all the comments surrounding the Facebook IPO.
There were a bunch of people using the fact that the stock didn't pop and that they had to use the greenshoe to prop up the price as a sign of failure when in fact it was really a way to approximate the dutch auction process by overselling and then pulling back to get to market equilibrium.
Then there were all the investors saying they were hurt by the IPO because it didn't pop and they couldn't sell it a few hours after buying it, so they took a loss. They then argued that this was a bad move because now Facebook stock had a bad name in the markets which would hurt more long-term than if they had just submitted to common practice by giving them some free profits for doing no work.
The old days of making 4x returns in a few hours of busy work on a trading terminal must have been really nice.
Comments
Reading this brought me back to all the comments surrounding the Facebook IPO.
There were a bunch of people using the fact that the stock didn't pop and that they had to use the greenshoe to prop up the price as a sign of failure when in fact it was really a way to approximate the dutch auction process by overselling and then pulling back to get to market equilibrium.
Then there were all the investors saying they were hurt by the IPO because it didn't pop and they couldn't sell it a few hours after buying it, so they took a loss. They then argued that this was a bad move because now Facebook stock had a bad name in the markets which would hurt more long-term than if they had just submitted to common practice by giving them some free profits for doing no work.
The old days of making 4x returns in a few hours of busy work on a trading terminal must have been really nice.