Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

> They are quite literally setting the prices of IPO's though, by fiat, and not via an auction or some other market-oriented mechanism.

Er, no, it's literally set by an auction (the auction occurring between the different banks who can underwrite the IPO).

A bank that is consistently able to predict the IPO opening-bell price better than the others, or is willing to accept a slightly smaller cut than the others, will win the auction, and will outperform the others on average.



> the auction occurring between the different banks who can underwrite the IPO

What do you mean? Do you have a reference?


I wouldn't characterize the activities between banks underwriting an IPO as an auction, probably closer to a negotiation [0].

This [1] is a well-written prose from Matt Levine on the role of underwriters in working with Snap prior to their IPO.

[0] https://www.bloomberg.com/view/articles/2016-01-15/uber-is-r...

[1] https://www.bloomberg.com/view/articles/2017-03-27/banks-tha...


How is that related to the claim of the IPO price being set by an "auction occurring between the different banks who can underwrite the IPO"?

Edit: thanks for the clarification


I've edited my comment above to be more clear.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: