Quote:
Originally Posted by woj
I don't get one minor detail.... isn't the $39-$42 price set by professionals, CEO of the company, CFO, consultants, etc? Why would they understate the value by 30-50% like you claimed in your example?
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The underwriters set the price of the stock to bring it out to the market, companies likes Goldman, Citi, Merrill Lynch, Morgan Stanley and the rest of the gang.
So they don't understate the value the underwriters based on the market bring it out at a certain price, then the rest is the demand for the stock which increases the price so pretty much when the company executives get in at 39 they are already in the money