Archive of UserLand's first discussion group, started October 5, 1998.

Re: Salon IPO--everyone's missing the point

Author:Dennis Peterson
Posted:6/24/1999; 12:10:57 PM
Topic:Salon IPO--everyone's missing the point
Msg #:7791 (In response to 7788)
Prev/Next:7790 / 7792

The idea is not that the math can calculate some mythical "true value" of the stock, but that the auction produces the same price as normal (non-IPO) trading. Whatever the market would pay for the stock today, if the IPO had been a year ago, is theoretically what they will pay for the IPO.

"The mechanism is based on an auction model developed by Nobel Prize-winning economist William Vickrey...According to Hambrecht's theory, the winning bid would be pretty close to what the market would pay in normal trading." --Wired News

And from the OpenIPO website: "OpenIPO means you are no longer on the outside looking in. Whether you want 100 shares or 100,000, you are on an equal footing with everyone who puts money on the table."

The model certainly does deflate speculative tendencies. And it would be interesting to check on how much stock has been turning over since the IPO.

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