[edutechnion]

So if they sold at their true price via the Google-style reverse auction, they would have $9 * 10 million more to use for business growth. Instead lots of hedge funds and high net-worth individuals that are big clients of GS and JPM made an easy $100k this morning.

[evanpw]

> true price via the Google-style reverse auction

Even with the auction, Google IPO'd at $85, and the stock opened at $100. If you think that the investment banks gave away $90M of Twilio's money to their friends, do you believe that Google did the same thing with $300M of their own money?

[jonknee]

Or they would have pissed everyone off by having an auction instead of a regular IPO and they wouldn't have had nearly as much interest in their shares. Google was a very special company and even then nearly managed to screw up their IPO.

[tomp]

No need for an auction. I don't know about this specific IPO, but often there are predictions of what the true stock price is (i.e. the "first trading day" stock price) floating around before the stock starts trading. E.g. for Facebook, the expected share price was about 37, the IPO was at 37, and the trading opened at 37. Facebook got the "premium", instead of the hedge funds and banks.

[jonknee]

Facebook may be the worst example of an IPO done right you could have picked. NASDAQ bungled it so badly they got sued:

http://www.reuters.com/article/us-nasdaq-omx-facebook-litiga...

[arjie]

The article says it was technical issues. That has nothing to do with the discussion.

[whatok]

It absolutely has to do with the discussion. The reason for the tightness of the IPO and first day closing price of Facebook was because of those technical issues. Trading was disastrous and had Facebook not been a household name, it's easily believable that it would have traded even lower.

[itchyouch]

Actually, the news prior to the IPO about FB's advertising not being quite as effective made people lose a lot of confidence in FB and want to pull out.

This exposed a race condition within the IPO process that bungled it up. The post mortem talks about "order modifications" which are actually order cancels right up to the point of the cross was supposed to take place.

http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2012-20

Pricing the IPO lower would have had people not feeling that the IPO was overpriced. The overpriced feeling people got caused them to want to tap out and brought out the particular race condition that Nasdaq hit. Normally, IPOs get lots of buying interest. The all-in, then folding behavior was unprecedented as people who didn't believe in the company IPO would never have put in bids in the first place.

[arjie]

But that's good for the GGP's argument. Going down means they extracted maximum value from the market. It's a very successful public offering by GGP's metric.

[harryh]

Think about it this way: 9 * 10m = $90 million. But probably they couldn't have sold the whole 10M slug at 24. Let's guess and say they left more like $45M on the table.

They are currently at a ~2B valuation.

45M / 2B = 2.25%

Twilio is (in theory) a high growth tech company. Say they want to grow at 15% a year. 2.25% / 15% = .15 or about 2 months worth of growth.

2 months is certainly something, but in the grand scheme of things isn't the hugest deal in the world.

[whatok]

Sentiment behind tech IPOs is already negative and complicating the IPO process would only further that sentiment. Hard to imagine the bookrunners would ever agree to that.