DEC
2019
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Frank Bernheisel: The View From Here
Frank Bernheisel
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Frank Bernheisel
Posted 11.12.13
Just Outside Washington

FRANK BERNHEISEL

THAT TWITTER BUMP

Twitter recenty had its initial public offering (IPO) of stock yesterday. It's stock was offered at $26 per share and jumped to $44.90 per share in what is called the bump. The folks on Wall Street cheered -- a huge success. This is in contrast to the IPO of Facebook where the offering price was $38 and at the end of the first day of trading it was still $38; it went down after that. The Facebook IPO was deemed a failure.

Back to the Twitter bump -- $18.90 per share is a lot of profit for holding a stock for one day. Who made that money? It was not the company, Twitter, which went public at least in part to raise capital to expand the business. It was the team of banks, led by Goldman Sacks, who did the IPO. And let's not forget the bankers' buddies who were let in on the good deal of this IPO at $26 per share. Clearly the initial pricing was way below the market value. Was this deliberate so that the bankers and their buddies could make a quick killing? Inquiring minds want to know.

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