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Comment by rossdavidh | Hacker News Reader

So, basically they set the price wrong?

No, the bankers set the price perfectly. They just made $360M in a day.

For the bankers, yes. But Dropbox appears to have set the price wrong, and left a huge amount of money on the table for somebody else (the bankers) to take instead? Or does this 40% jump help Dropbox the company in some way I'm not understanding?

The bankers will sell this as building "momentum" for the stock.

It does not benefit Dropbox directly in any way, it is literally $360M that could have gone to Dropbox but went to the bankers and their clients.

Banks would make money even if stock goes down, through "stabilization" https://www.bloomberg.com/view/articles/2016-11-25/appeals-c...

> They just made $360M in a day.

that's if they are able to liquidate those assets within a day without affecting market price.

I don't think so. The same thing happened to SNAP where the stock immediate spiked after the IPO due to speculators. Now that a year has past since the IPO, it turns out that the IPO price was pretty reasonable.

That sounds right from the point of view of the whole economy, and is this stock priced correctly. But I think if I were Dropbox I'd rather have sold my stock at an even higher price, and if the IPO buyers take a loss on it I wouldn't think that's a problem. But, I am not experienced in such matters, perhaps I'm just missing something.

I suspect that it's to avoid conflicts of interest. If Dropbox makes a lot of money from an overvalued IPO, it may look like market manipulation even if it's not.

If the stock price bounces up and back down (but still closes higher after a year compared to IPO), no one is really upset. People chalk it up to hype.

If the stock price is lower after a year than IPO, you start feeling a lot of investor pressure. No one likes losing money and people take it as a sign that there are problems with your business.

Here’s a good discussion of IPO pricing, and why it’s not so simple as “set the price wrong”:

http://epicureandealmaker.blogspot.com/2011/05/jane-you-igno...

Huh. Yeah I don't get it. If I sold my kitchen (saying it's 5% of my house) for $30,000 when I could have gotten $50,000, I suppose I wouldn't be broke up about it, but I'd still rather have %50,000.

$, not %, sorry.

that post mostly says, "the price was wrong, but no-one cares for reasons".

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