IPO ? Think Again

The latest IPO of the next big thing — Snapchat — is not looking so good. True to form, the Wall Street investment banking machine and the financial media hypesters at CNBC whipped the crowd into enough of a frenzy that the stock popped nicely in its first two days of trading.

The stock “went public” at $17 a share. But of course, it was never really available at $17. That’s not how this works. Sure, big important clients at some investment banks might’ve gotten it at $17, but you and me? Yeah, right. Again, that’s not how it works. Individual investors are third on the food chain, maybe fourth…

First there are the venture capitalist guys that buy into hot new companies in the early stages. Then there are the investment banks that come in with some investment capital in order to ensure a piece of the action when IPO day rolls around. Then there are the favored clients that get the cheap shares of the actual offering — which were $17 for SNAP. Then, after all those players get their piece, those shares hit the market.

It’s basically payola, all the way down to when the shares are actually available on the Nasdaq or New York Stock Exchange. Which means when you buy an IPO, you’re paying the favored clientele their profit. You’re paying the investment banks. And you’re paying the venture capitalists. And you’re paying the company insiders…

They are all selling — and you’re buying.

In this case, it probably won’t help you to know that SNAP founder Evan Spiegel is now a 26-year-old who’s worth over $5 billion.


The Pinstripe and Bowler Club shares information with MF Solutions Ltd