Unique IPO strategy?

Discussion in 'Trading' started by garfangle, Nov 13, 2003.

  1. Let's say a company wants an IPO for its stock. However, instead of pricing it at $10 and issuing 1 billion shares for a market cap of $10B, it is priced at $.01 and 1 TRILLION shares are issued (or at the lowest possible initial trading price). That way the stock can never fall without being worth zero, and the stock has only an upside (initially). Meaning, a trade from $.01 to $.02 means that the company has instantly doubled its "worth." It would only need to appreciate 99 cents to be the first trillion dollar company.
     
  2. blb078

    blb078

    that would never happen, first off, no company has ever issued an ipo for a billion shares, if a company were to issue a hundred million shares, that would be huge, most are far less than than that, most companies who issue huge shares have been extremely large private companies or they are a spin off of an existing large publicly traded company.
     
  3. Besides the other reasons, It would never be listed. All the major exchanges or stockmarkets have min requirements. Usually if a company's stock gets under a buck for a few weeks they have to reverse split it just to keep it from getting delisted.
     
  4. I think you misunderstand, when I meant a trillion shares, I am referring to outstanding shares, of which the issued IPO number may be far lower. And I am not saying it would happen, just that there is no technical reason why it couldn't.
     
  5. blb078

    blb078

    you had initially said ipo it's stock and pricing 10.00 a share and 1 billion shares, that means you would want to offer a 1 bill share ipo @ 10 bux each, which is impossible(simple suppy & demand) you can't really offer an ipo for almost the whole amount of an excanges daily volume. not to meniton the previous poster stating it would be delisted, and go OTC/pink sheet, in that case they would just trade the stock in 1/100's or 1/1000's, also there is a annual fee to pay the exchange for outstanding shares, no matter what the price of the stock is. plain and simple, it would never happen.
     
  6. google could do a billion shares at 10 i bet. it is expected to ipo with a market cap of 15-20 billion.
     
  7. blb078

    blb078

    that's what it's expected to do, but there's no way in hell their going to do a 1 billion share ipo, they'll offer a few hundred million at a higer price,(it goes back to simple supply and demand) lets say they offer in on the Nasdaq, naz does about 1.5 bil shares a day, give or take a few, do you expect a company to offer an ipo of 1 bill, shares when the exchage does only a little over that, if they offered a billion share ipo, as soon as it came out, it would drop, why would people bid up the stock when there's already so many available, it will prob, be 3-4 hundred mill max at around 30-35 a share, and the insiders would prob keep a good portion of it.
     
  8. Okay, let's reverse the strategy aka go Berkshire. Have an IPO with few shares issued but at a huge initial price (~$40K/share). The effect of it would be to keep the stock out of the hands of day-traders because of the huge spread.
     
  9. ipos dont always sell out on the first day. if the underwriter is big enough he will hold the price until they float all the shares.
    i didnt say google would do a billion share ipo but under the right circumstances it could be pulled off.
     
  10. blb078

    blb078


    i'm not sure exactly what Berkshires ipo price was i think it was around 6-7k a share in the early 90's, but they just chose not split or do any secondary offerings, that was their intention all along, long before daytraders, and not just any company can do that, i would have to be a very well established company, ABC coffee shop or whatever wouldn't have a chance.
     
    #10     Nov 13, 2003