IB IPO Auction System

Discussion in 'Stocks' started by Trader_Herry, Apr 16, 2007.

  1. Where can I know the performance of different new stock on the first day (open and close)?

    Is it normal that a new stock will gap up on the first day?
     
    #11     Apr 24, 2007
  2. GOOG did a Dutch auction and priced shares at $85 with a range of 85-95... it opened at $100.01
     
    #12     Apr 24, 2007
  3. A reminder, that was for what percentage of the corporation? IB is offering up 5%.
     
    #13     Apr 24, 2007
  4. Jaxon

    Jaxon

    A share price of $25 puts the value of the entire company at $10bil. Merrill has a market cap of $81 bil, Goldman $96bil, Lehman $41bil, Schwab $24.5 bil, and Tradestation, $603mm, just for reference.

    If you think IB can increase revenue over time while maintaining very low staffing levels and expenses, then the company may very well be worth $10bil. OTOH, they did a pretty good job of outlining some of the risks to their business in their prospectus, and I am a bit skeptical. I also wonder to what extent the personnel expense line item has been held down by stock grants.

    As for dutch auction strategy, it is fine for one individual to bid $100 for shares and pay the expected auction price of +-$25, but if there are too many people following this strategy you may end up paying $50. If I really wanted to get in on this IPO I might bid $30, but I wouldn't bid $50 or $100. My only experience with dutch auctions has been US Treasury auctions, and dealers very often unintentionally end up paying a greater than market price by using this very strategy.
     
    #14     Apr 24, 2007

  5. keep in mind that the retail brokerage is only 14% of revenues (although up from 7% the yr prior)
     
    #15     Apr 26, 2007
  6. TOM134

    TOM134

    #16     Apr 26, 2007