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**soonahonsefalh** · 05-24-2012, 09:31 PM

So, as a lay person, would I be right in assuming that the IPO price is set to what the issuing company believes they can sell them all for, and that the regular share value reflects what the market believes they are worth?

In theory yes, but in practice not quite, because FB 'shares' have been traded on private secondary markets for years, fully encouraged by the top brass at FB, including brat-boy Zuckerberg. The people who own those 'shares' had a huge say in the IPO starting price.

The share price reflects the actual value of the buy/sell transactions as they occur. If you offer $32 and I ask $42, and there is no trade, what do you think the price is?

Ah, seems they may have increased the share issue to benefit from all the potential 'investers' who requested more than they expected to get from their allocation, saturating the market and quenching the interest in the shares.
Going to be interesting to see what happens about the investigations about the 'illegal' share trading before the IPO, the selective disclosure of revenue information and the artificially held stock value? Seems there are also many who tried to cancel their purchase but were unable to due to problems with the trading host... The issue wasn't people trying to cancel their trades. The NASDAQ were not able to match buyers/sellers because of an outage, and so many brokers didn't know their client's positions or the real price. This meant some orders were executed at the wrong price. However, trades can easily be cancel corrected before settlement and many were.

All in all, perhaps this will go down as a lesson tought in business schools about how not to do an IPO? Or go down as a lesson in how not to believe every scrap of BS you read about.

05-24-2012, 09:31 PM	#84
soonahonsefalh Join Date Oct 2005 Posts 603 Senior Member	So, as a lay person, would I be right in assuming that the IPO price is set to what the issuing company believes they can sell them all for, and that the regular share value reflects what the market believes they are worth? In theory yes, but in practice not quite, because FB 'shares' have been traded on private secondary markets for years, fully encouraged by the top brass at FB, including brat-boy Zuckerberg. The people who own those 'shares' had a huge say in the IPO starting price. The share price reflects the actual value of the buy/sell transactions as they occur. If you offer $32 and I ask $42, and there is no trade, what do you think the price is? Ah, seems they may have increased the share issue to benefit from all the potential 'investers' who requested more than they expected to get from their allocation, saturating the market and quenching the interest in the shares. Going to be interesting to see what happens about the investigations about the 'illegal' share trading before the IPO, the selective disclosure of revenue information and the artificially held stock value? Seems there are also many who tried to cancel their purchase but were unable to due to problems with the trading host... The issue wasn't people trying to cancel their trades. The NASDAQ were not able to match buyers/sellers because of an outage, and so many brokers didn't know their client's positions or the real price. This meant some orders were executed at the wrong price. However, trades can easily be cancel corrected before settlement and many were. All in all, perhaps this will go down as a lesson tought in business schools about how not to do an IPO? Or go down as a lesson in how not to believe every scrap of BS you read about.
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