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At 04:37 PM 1/6/98 +0100, GwGautier wrote:
>hans esser wrote:
>>
>> .......just heard on CNBC that after some "bad news" OMEGA's stock
>> TODAY is down 1 9/16 to 3.25 and that was an IPO at ELEVEN $$$ just 3
>> months ago ???????
>> Can someone explain how that was placed at 11 $ ? by whom ? to whom ?
> Sounds like the stock was rigged,
Hang on guys! While "Omega bashing" is often the topic of this list -
heck, I've even joined in from time-to-time - accusing them of "stock
rigging" is a bit much.
Software initial public offerrings USUALLY decline from the offering
price. That's just the norm. Sure, the exceptions - like Netscape
and Yahoo! - get a lot of press when everyone you meet at cocktail
parties claims to have gotten IPO-priced shares, and made 2X their
money by that day's close. BUT, these are really the exceptions -
most second and third tier companies (and I'd put Omega in that class
- they're certainly not a Marimba or @Home) DO drop off their IPO
prices. And, in markets like we've seen since Omega went public,
where most small/tech stocks have been punished, many small software
companies have dropped as much as 11 --> 3 1/4.
Now, you could say that the investment banks who price the IPO's are
the villains here. That they price the offerrings too high, knowing
it is likely that the price will subsequently fall. BUT, before
going down that road, consider that someone has to buy all of the
stock that they price to sell. It is a free market, after all. My
take on it is that the investment banks' ethics are on a par with
the Las Vegas casinos - sure they take people's money - but they
don't make a secret of the fact that the game is rigged heavily in
their favor. If you chose to play....
Jay Mackro
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