[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.

[whatok]

How are you tying efficacy of advertising with busted exchange? I don't see it.

This deal was upsized very close to the IPO date and completely oversubscribed with huge retail interest. Everyone wanted this deal to succeed and news behind it was extremely positive. Don't see how random chatter about advertising causes a stock exchange to blow up.

To piggyback on the weird comparisons, why didn't Square encounter any issues on their IPO? News was extremely negative and it was said that they were forced to IPO to cash out investors.

[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.

[whatok]

What do you mean by "going down"? The IPO price was the IPO price. If people are unable to trade during the day and the price is unchanged, it just means that the stock didn't have an opportunity to trade up.

[arjie]

But Facebook didn't trade at a higher price when there was no longer any trouble. Nothing material changed about Facebook in those few days. So either the price would have gone down (meaning Facebook did the right thing), it would have stayed flat (same here), or if it would go up, it would go up when the exchange fixed their trouble (it didn't).

Nothing indicates that this went poorly for Facebook. It seems to indicate the opposite.