Let's say a company wants an IPO for its stock. However, instead of pricing it at $10 and issuing 1 billion shares for a market cap of $10B, it is priced at $.01 and 1 TRILLION shares are issued (or at the lowest possible initial trading price). That way the stock can never fall without being worth zero, and the stock has only an upside (initially). Meaning, a trade from $.01 to $.02 means that the company has instantly doubled its "worth." It would only need to appreciate 99 cents to be the first trillion dollar company.
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Unique IPO strategy?
- Thread starter garfangle
- Start date
Quote from garfangle:
Let's say a company wants an IPO for its stock. However, instead of pricing it at $10 and issuing 1 billion shares for a market cap of $10B, it is priced at $.01 and 1 TRILLION shares are issued (or at the lowest possible initial trading price). That way the stock can never fall without being worth zero, and the stock has only an upside (initially). Meaning, a trade from $.01 to $.02 means that the company has instantly doubled its "worth." It would only need to appreciate 99 cents to be the first trillion dollar company.
that would never happen, first off, no company has ever issued an ipo for a billion shares, if a company were to issue a hundred million shares, that would be huge, most are far less than than that, most companies who issue huge shares have been extremely large private companies or they are a spin off of an existing large publicly traded company.
Quote from blb078:
that would never happen, first off, no company has ever issued an ipo for a billion shares, if a company were to issue a hundred million shares, that would be huge, most are far less than than that, most companies who issue huge shares have been extremely large private companies or they are a spin off of an existing large publicly traded company.
I think you misunderstand, when I meant a trillion shares, I am referring to outstanding shares, of which the issued IPO number may be far lower. And I am not saying it would happen, just that there is no technical reason why it couldn't.
Quote from garfangle:
I think you misunderstand, when I meant a trillion shares, I am referring to outstanding shares, of which the issued IPO number may be far lower. And I am not saying it would happen, just that there is no technical reason why it couldn't.
you had initially said ipo it's stock and pricing 10.00 a share and 1 billion shares, that means you would want to offer a 1 bill share ipo @ 10 bux each, which is impossible(simple suppy & demand) you can't really offer an ipo for almost the whole amount of an excanges daily volume. not to meniton the previous poster stating it would be delisted, and go OTC/pink sheet, in that case they would just trade the stock in 1/100's or 1/1000's, also there is a annual fee to pay the exchange for outstanding shares, no matter what the price of the stock is. plain and simple, it would never happen.
Quote from blb078:
you had initially said ipo it's stock and pricing 10.00 a share and 1 billion shares, that means you would want to offer a 1 bill share ipo @ 10 bux each, which is impossible(simple suppy & demand) you can't really offer an ipo for almost the whole amount of an excanges daily volume. not to meniton the previous poster stating it would be delisted, and go OTC/pink sheet, in that case they would just trade the stock in 1/100's or 1/1000's, also there is a annual fee to pay the exchange for outstanding shares, no matter what the price of the stock is. plain and simple, it would never happen.
google could do a billion shares at 10 i bet. it is expected to ipo with a market cap of 15-20 billion.
Quote from vhehn:
google could do a billion shares at 10 i bet. it is expected to ipo with a market cap of 15-20 billion.
that's what it's expected to do, but there's no way in hell their going to do a 1 billion share ipo, they'll offer a few hundred million at a higer price,(it goes back to simple supply and demand) lets say they offer in on the Nasdaq, naz does about 1.5 bil shares a day, give or take a few, do you expect a company to offer an ipo of 1 bill, shares when the exchage does only a little over that, if they offered a billion share ipo, as soon as it came out, it would drop, why would people bid up the stock when there's already so many available, it will prob, be 3-4 hundred mill max at around 30-35 a share, and the insiders would prob keep a good portion of it.
Quote from blb078:
you had initially said ipo it's stock and pricing 10.00 a share and 1 billion shares, that means you would want to offer a 1 bill share ipo @ 10 bux each, which is impossible(simple suppy & demand) you can't really offer an ipo for almost the whole amount of an excanges daily volume. not to meniton the previous poster stating it would be delisted, and go OTC/pink sheet, in that case they would just trade the stock in 1/100's or 1/1000's, also there is a annual fee to pay the exchange for outstanding shares, no matter what the price of the stock is. plain and simple, it would never happen.
Okay, let's reverse the strategy aka go Berkshire. Have an IPO with few shares issued but at a huge initial price (~$40K/share). The effect of it would be to keep the stock out of the hands of day-traders because of the huge spread.
Quote from blb078:
that's what it's expected to do, but there's no way in hell their going to do a 1 billion share ipo, they'll offer a few hundred million at a higer price,(it goes back to simple supply and demand) lets say they offer in on the Nasdaq, naz does about 1.5 bil shares a day, give or take a few, do you expect a company to offer an ipo of 1 bill, shares when the exchage does only a little over that, if they offered a billion share ipo, as soon as it came out, it would drop, why would people bid up the stock when there's already so many available, it will prob, be 3-4 hundred mill max at around 30-35 a share, and the insiders would prob keep a good portion of it.
ipos dont always sell out on the first day. if the underwriter is big enough he will hold the price until they float all the shares.
i didnt say google would do a billion share ipo but under the right circumstances it could be pulled off.
Quote from garfangle:
Okay, let's reverse the strategy aka go Berkshire. Have an IPO with few shares issued but at a huge initial price (~$40K/share). The effect of it would be to keep the stock out of the hands of day-traders because of the huge spread.
i'm not sure exactly what Berkshires ipo price was i think it was around 6-7k a share in the early 90's, but they just chose not split or do any secondary offerings, that was their intention all along, long before daytraders, and not just any company can do that, i would have to be a very well established company, ABC coffee shop or whatever wouldn't have a chance.