Google IPO Swami 255
The Google IPO Swami writes: "I'm running an experiment and Slashdot readers would be good contributors. As you may know, Google recently announced that they will be using a unique dutch auction structure to price shares of their IPO. Instead of having the underwriters determine the opening price, the price will be set by the demand of investors that register to participate. I'm interested in how well the public can estimate this demand and the price of the shares to be offered. I'm giving away free shares in Google to find out. The person that comes closest to estimating the opening and closing price of the stock on the IPO date will win shares in the company."
euhm ... (Score:1, Interesting)
20$ - 80$ ?
First and Last (Score:2, Interesting)
You mean the person that guess the first buying bid of the day and the price of the last buying bid of the day... I bet the first one will be higher than the last one. I like the 20 - 80 from the first poster but has it backwards. I bet its 80 and 20.
Abuse? (Score:5, Interesting)
Re:Who knows? (Score:5, Interesting)
Two 0-999 ranges
i.e. 1000*1000 possible combinations Need 1,000,000 submissions to 'win'
Spamgourmet.com allows dynamic forwarding
g000000.2.name@spamgourmet.com
To
g999999.2.name@spamgourmet.com
Here I come!
dutch auction effect (Score:5, Interesting)
And another thing: read the prospectus: the wall st guys are still getting a pretty good cut!
Re:Higher price (Score:4, Interesting)
The IPO clearly states that Google has the right to reject any bid. They specifically say that if they determine that someone is not bidding in good faith--such as submitting a ridiculously high bid--that they won't accept that bid.
The other problem with your $500 bid is that if a significant number of other bidder think the same as you, you've just bought yourself a $500 stock. Are you willing to take that risk?
Re:Who knows? (Score:5, Interesting)
You are looking at the stock market as a pure numbers game when a large factor in the rise and/or fall of googles stock on IPO day will be how people 'feel'.
That is what caused the tulip trouble and the dot com trouble.
The range will be small, and downwards (Score:4, Interesting)
In a normal IPO, the investment bank (or brokerage) sets the price, say, $20, then buys the shares off of the issuing company for $20. Any spread off of that goes directly to the brokerage (or investment bank).
This is a Bad Deal for the issuing company, because the spread should have gone to the company, not to the brokerage. Think about it: if MSDW priced a stock at $20, but were able to sell at $200, then the issuing company just lost $180! The brokerage, of course, made $180.
With the dutch auction, there will (or should be) little or no upside to google's stock because the price will be determined by how much people are willing to pay up front. In fact, it will probably drop on the first day, since people confused by this concept will try and flip, leading to a sell imbalance.
Depending on the shares that are to be issued, I'd say that conservatively google's stock should open at anywhere from $175 +- 8%, and drop about 15%. Why $175? Because -everyone- knows google, and companies that are well-known to the public trade at a premium.
The other interesting thing about google is that a savvy investor/hacker could manipulate the earnings by writing a virus that sneakily clicked on all those google ads that appear when you do a google search. Voila, instant earnings! With enough spread, you could do millions of hits a day, which translates to millions of dollars a day (thank you, adwords!)
We'll see.
Re:Mike Hawk's guess (Score:4, Interesting)
type in scox and hit compare
Re:The real object of the game... (Score:4, Interesting)
Whatever you feel, slashdot is playing a significant role in giving this effort publicity - and, to be honest, I am forced to ask whether this is stretching the "News for nerds" thing a bit far; Sure, Google may use Linux, and they may have a clever search algorithm, but does that justify blow by blow coverage of their efforts to raise more capital?
Re:Who knows? (Score:1, Interesting)
Re:You know, he's doing a bayesian survey (Score:5, Interesting)
First of all, most people who enter the contest won't be experts like the pilots of your example.
And next to that, even if they were there still could be situations where this approach would not work. Let's consider the plane example: If there were to probable routes A and B, some experts will choose a crash site along route A and others will choose a crash site along route B. The average of these guesses will be somewhere between routes A and B, on a highly improbable route.
I'm not saying this guy won't get useful data out of this game. Au contraire, I think it's a smart idea. But I'm not sure whether using the data in the way you suggested to calculate the stock value will yield a reliable estimate.
Re:Who knows? (Score:1, Interesting)
I'm betting the reverse. (Score:3, Interesting)
What I can't decide is if I should bid for a LOT of shares at, say, $1 each, just in case for some reason not enough people bid to take up all the shares, or if I should bid $500 per share, just to make SURE I get some shares, no matter what the price is.
Which is why I think the price will actually decline on the first day of trading - enough people will probably bid a little higher than they think the stock is actually worth just to cover the case where they undervalue it a bit, and people who actually get IPO shares will find a lack of buyers after the stock has been issued.
If this were the SECOND time an IPO had been done by dutch auction, I wouldn't be so sure, but... everyone is a newbie at this.
Re:The real object of the game... (Score:2, Interesting)
Book building (Score:4, Interesting)
Google has short circuited this entire process by offering a dutch (sinlge price) auction which will (hopefully) use a maximal clearing volume algorithm to determine the price at which the maximum volume of stock will clear. The other constratints of this algorithm will determine that at the end of the auction there will be no unsatisfied demand at a price that is better than the one at which the stock traded and as such there will be no immediate price pressure on initial secondary trading. So it should stay around the price at which it opens.
What will that price be? Well thats a good question, but it Google publishes the state of the book over the weeks before the IPO then we can run the MCV algorithm and determine the "if it opened today" price which is usually a very good indicator of the final price as the IPO time approaches (well obviously really
It is really a very interesting approach and on that the intitutional brokers will not really like very much at all. I wish them good luck.