Comments on: Visa’s initial public offering http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/ Investing for beginners Wed, 07 Jan 2009 10:55:55 +0000 http://wordpress.org/?v=2.6.2 By: moneyrelations http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2495 moneyrelations Thu, 28 Feb 2008 00:58:49 +0000 http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2495 Hi Jason, Thanks so much for your readership and comment. Hope to see you around these parts again :) @ Meg and Adil Great comments and insights. They are better than my original post! I think what Meg is referring to is when some of the IPOs are correctly priced so they won't go through as much flipping by the institutional investors making a quick profit. But I also understand where Adil is coming from with the first day pop of hot IPOs. But buyer beware... here's a little abstract "<a href="http://www.bowne.com/securitiesconnect/details.asp?storyID=1467">Institutional Investors Reap Greatest Returns from IPOs</a>". So, for the beginner investors in my readership, take caution in what both Meg and Adil advise. @ Chris Brand, baby. Brand. A well known company like this going public? This will be huge but let's see what happens after the first year. I'm not sure how the credit crisis will affect Visa as from my understanding, it's not a lender - that's the banks themselves. And everyone uses the convenience of credit cards but Visa gets the fees... @ Nancy And how's your relationship now with the person (broker?) who offered this to you? Nice sales job :) Hi Jason,

Thanks so much for your readership and comment. Hope to see you around these parts again :)

@ Meg and Adil

Great comments and insights. They are better than my original post!

I think what Meg is referring to is when some of the IPOs are correctly priced so they won’t go through as much flipping by the institutional investors making a quick profit. But I also understand where Adil is coming from with the first day pop of hot IPOs. But buyer beware… here’s a little abstract “Institutional Investors Reap Greatest Returns from IPOs“.

So, for the beginner investors in my readership, take caution in what both Meg and Adil advise.

@ Chris

Brand, baby. Brand. A well known company like this going public? This will be huge but let’s see what happens after the first year. I’m not sure how the credit crisis will affect Visa as from my understanding, it’s not a lender - that’s the banks themselves. And everyone uses the convenience of credit cards but Visa gets the fees…

@ Nancy

And how’s your relationship now with the person (broker?) who offered this to you? Nice sales job :)

]]> By: Nancy (aka money coach) http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2494 Nancy (aka money coach) Wed, 27 Feb 2008 19:35:57 +0000 http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2494 I got invited in on this once, as an investor just before it truly went public. It was for this really smart kind of payphone. I invested my teeny nest egg (before I knew better than to do that) entirely. This was in the early 90s, just as cel phones lifted off. Fill in the tragic ending of the story for yourself, sigh. I got invited in on this once, as an investor just before it truly went public. It was for this really smart kind of payphone. I invested my teeny nest egg (before I knew better than to do that) entirely. This was in the early 90s, just as cel phones lifted off. Fill in the tragic ending of the story for yourself, sigh.

]]> By: Adil http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2492 Adil Wed, 27 Feb 2008 17:45:46 +0000 http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2492 @Meg: What Mariam is referring to is being able to buy the shares at the prices which the company issuing the shares is selling to 'prime' investors/institutions.. not at the market value once they're public. If you look at what has happened in the history of IPOs, most IPOs open at a price much higher than that received by the company issuing the shares. As pointed out by Mariam, the reason for this increase in price is due to the hype generated by the investment banks and the desire for investors to own something new (and hopefully successful). So, essentially, these 'prime' investors/institutions can make a guaranteed killing by selling on the first day just because they already wealthy. I agree that sometimes an IPO may actually open at a price lower than it was sold, but it's rare. In fact, it happened with Reliance Power not too long ago when it issued $3 billion USD, but that's because any informed investor could see that the IPO price severly overvalued the company. Having said that, the hype caused the IPO shares to sell out in 60 seconds from time of issuance and were 10x oversubscribed! @Meg: What Mariam is referring to is being able to buy the shares at the prices which the company issuing the shares is selling to ‘prime’ investors/institutions.. not at the market value once they’re public. If you look at what has happened in the history of IPOs, most IPOs open at a price much higher than that received by the company issuing the shares. As pointed out by Mariam, the reason for this increase in price is due to the hype generated by the investment banks and the desire for investors to own something new (and hopefully successful). So, essentially, these ‘prime’ investors/institutions can make a guaranteed killing by selling on the first day just because they already wealthy. I agree that sometimes an IPO may actually open at a price lower than it was sold, but it’s rare. In fact, it happened with Reliance Power not too long ago when it issued $3 billion USD, but that’s because any informed investor could see that the IPO price severly overvalued the company. Having said that, the hype caused the IPO shares to sell out in 60 seconds from time of issuance and were 10x oversubscribed!

]]> By: Chris http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2489 Chris Wed, 27 Feb 2008 12:41:05 +0000 http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2489 Wow, I always thought they were a public company, I guess I never really thought about it. Apparently MasterCard just went public a couple years ago, I would have figured these major companies would have gone public a long time ago. Wow, I always thought they were a public company, I guess I never really thought about it. Apparently MasterCard just went public a couple years ago, I would have figured these major companies would have gone public a long time ago.

]]> By: Meg http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2468 Meg Tue, 26 Feb 2008 17:00:08 +0000 http://www.moneyrelations.com/2008/02/26/visas-initial-public-offering/#comment-2468 You can always buy the shares immediately via your discount brokerage or regular stockbroker, the hour the shares actually go public. The stock wont' usually have moved too much in the first minutes or even hours. But keep in mind that IPO doesn't always mean the price will go up. Investment bankers basically make up the price at which they think the stock should be offered, and sometimes the value drops after the IPO. Also, many companies who are in trouble use IPOs to try to hide/avoid that reality. After all, what they're doing is raising money--if the company was doing great and they thought shares would continue to rise, they wouldn't be diluting their current shareholders' value by spreading the company among millions more investors. Sure, great, stable, profitable private comapnies often go public simply because the owner(s) want to cash out while the getting's good. But it's also sometimes a desperate move. And given what's going on in the credit markets right now, I'm not ready to bet on Visa. You can always buy the shares immediately via your discount brokerage or regular stockbroker, the hour the shares actually go public. The stock wont’ usually have moved too much in the first minutes or even hours.

But keep in mind that IPO doesn’t always mean the price will go up. Investment bankers basically make up the price at which they think the stock should be offered, and sometimes the value drops after the IPO.

Also, many companies who are in trouble use IPOs to try to hide/avoid that reality. After all, what they’re doing is raising money–if the company was doing great and they thought shares would continue to rise, they wouldn’t be diluting their current shareholders’ value by spreading the company among millions more investors.

Sure, great, stable, profitable private comapnies often go public simply because the owner(s) want to cash out while the getting’s good. But it’s also sometimes a desperate move. And given what’s going on in the credit markets right now, I’m not ready to bet on Visa.

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