The way Google's IPO went down is just foul in my view. The way I see it is that the Wall Street crew just wanted in at a discount to fair value so they talked the valuation down. Now there have been three price targets put on the stock that are within the original $108 - $135 range.
Yesterday we had this:
GOOG Google: ThinkEquity starts coverage of today's IPO with a Buy and $120 price tgt.. deal priced at $85
And today we get this:
Google started with a Hold at Amtech (GOOG) 101.91 +1.57 : -- Update -- AmTech initiates GOOG with Hold and views fair value for GOOG at $110. Thus, firm believes the shares could trade higher on valuation. However, given the high level of risk in these shares -- including the likelihood that the near-term catalysts are more likely to be negative than positive -- firm would want more of a discount before being aggressive buyers of GOOG. Would look for a 20% discount -- around $92.... Amtech's $110 price target is based on a 22X multiple on firm's 2005 EBITDA est of $1.4B ($4.75 per share), adjusting for $6.03 in net cash post the IPO.Google started with a Buy, $115 tgt at Jefferies (GOOG) 100.33 : Jefferies initiates GOOG with Buy and $115 fair value. Firm says that as a dominant paid search-marketing provider, with 37% market share, Google has the brand, the innovative drive and the cash to lead this $5 bln segment, which is growing at a five-year CAGR of 25%, by their estimates. In a seasonally weak 2Q04, Google gained market share, with rev from its proprietary sites up 13% sequentially, compared to Yahoo! up in the mid-single digits and AOL down by roughly 3%. Firm believes that such a performance was helped by massive free publicity around co's much talked about IPO. With roughly 50% of all paid clicks derived from third party Web sites in 2Q04, up from 44% in FY03 by firm's ests, we find that growth (and therefore value) is increasingly in the Google network, not in Google's proprietary sites. Firm estimates that rev from the network will grow at 34% vs. 22% for the Google sites over
Shady, shady, shady! They just stole a ton of money from the Google insiders and lined their own pockets with it.
They had to find SOME way to get back at Google's audacity to try to do this deal largely without them!
It occurred to me that GOOG would have to go on the market at *some* kind of discount, otherwise nobody would have any motivation to sell their shares in the aftermarket.
Still, somebody talked the Google execs into accepting a clearing price 15 percent below the market value of the stock.
It's foul that Google got talked down? Then they could have pulled it if they didn't like the price.
I don't know if they were talked down as opposed to bluffed. You had all these people coming on TV and telling the world that they weren't gonna participate b/c the price was too high, while in actuality the price was apparently fair. Not one of these firms that just initiated coverage came out before the IPO and said that the valuation was in the proper range.
But you're right though, they could have pulled it. if the terms were unacceptable. Although I think they were basically forced to go public b/c of some SEC regulation regarding the number of shareholders (http://zdnet.com.com/2100-1104_2-5119504.html). In the end it still stinks to me.
I think on balance that aside from the 15 percent handout to IPO bidders, the whole thing was rather clean.
Big banks/brokerages and their media flunkies could've talked the stock down a lot further if they were sufficiently venal. The problem was that Google is a pretty good company w/a pretty good track record. How can you trash something everybody uses every day?
Google got 85 percent of the market value of its stock, which is a helluva lot more than most young companies have gotten in the past.
That's true Tom, they used to really jack companies back in the day.
"They just stole a ton of money from the Google insiders"
The "insiders" set the bidding range and the "Insiders" who can sell shares in 2 weeks - so far ar doing great with stock up 20% on first 2 days. If the bidding was set at $110 - who would buy? and would the price have gone up?
Here is a stock wiht a PE of over 100 right out of the gate and to think that some how the Insiders did not get more then a fair deal is wild