Nothing is broken.
Fear and greed is at work as it always is.
Yes, the regulations have swung too far into the costly mode.
Yes, technology companies are going public later.
Yes, there are a slew of broken technology IPO’s.
Yes, it will get worse before it gets better.
But, IPO’s will never die.
The latest meme amongst the VC’s, tech ‘journalists’, and founders is about the ‘bubble’, when it will end and why.
Farhoo at the WSJ is ground zero of latest with this piece. It’s not interesting to me but it set Fred Wilson off to write this piece in which he reminds everyone that Wall Street is not fully stupid, just mostly stupid. Obviously I must stop now and insert this clip from ‘The Princess Bride’ to offer my thoughts on the IPO market:
Absent from these discussions as always – are the banks themselves. They get paid, they sell. They don’t have time to think or ‘feel’.
On Stocktwits, one chart sums up the current broken state of the technology market. Here is a chart of Grubhub since their IPO overlaid against insider sales.
Apparently $GRUB founders, top management and early backers also had zero confidence in analyst fantasy estimates…
— Jean Fonteneau (@JFinDallas) Jul. 2 at 12:15 PM
$ETSY is wetsy and $LC (Lending Club) needs someone to loan them some shareholders willing to buy the stock.
Greed has had it’s day…and week… and month in technology. The IPO’s are just way too late in the company growth lifecycle and insiders are either too rich from private sales or licking their chops to get out at juiced up valuations.
If Facebook had not acquired Instagram and Whatsapp the stock would be a teenager. That’s not organic growth, that’s a ballsy bet it all CEO who got it right.
The greed seems to be tipping as we speak…
Some fear is good. It makes smart people rethink things. It makes scorned investors move to other sectors for opportunity.
The last year it was hamburgers…
I don’t think Shake Shack shareholders would say the IPO market is broken…yet.
Today Shake Shack is bigger than the whole Coal Industry.
— StockTwits (@StockTwits) Jul. 1 at 08:16 AM
Interestingly enough, there are more chemicals in their burgers and shakes than what it takes to burn coal for energy.
As Fred says and I agree, the public are not ‘unwashed masses’. In my opinion, IPO’s are not broken. The sophisticated investors are just voting by selling the losers.