I'd be curious to have someone fill in the missing details for me. Square (SQ) the mobile payment company went public today. The IPO was priced BELOW the "low end of the range" at $9 per share. This was apparently a bit of a disappointment since the expected range was $11-$13 per share.
So the shares were priced at $9 per share (missing the range) yet they ended the first day or trading at $13.09 (+45%).
Why the hell were the shares priced at $9 if the apparent market value was $13? I understand IPOs are underwritten by big banks and brokerage companies who buy them in chunks - but how the hell is the market so inefficient to raise such little money compared to the apparent market value? And why would companies use these firms if they fail to raise the maximum amount of money possible?
Contrast this with something like Facebook which initially struggled to close at the IPO price on the first day of trading and even offered shares directly to individual investors.
So the shares were priced at $9 per share (missing the range) yet they ended the first day or trading at $13.09 (+45%).
Why the hell were the shares priced at $9 if the apparent market value was $13? I understand IPOs are underwritten by big banks and brokerage companies who buy them in chunks - but how the hell is the market so inefficient to raise such little money compared to the apparent market value? And why would companies use these firms if they fail to raise the maximum amount of money possible?
Contrast this with something like Facebook which initially struggled to close at the IPO price on the first day of trading and even offered shares directly to individual investors.
(Mis)pricing IPOs