Skip to main content

The first thing you need to know about technology IPOs is that they are a con.

The idea behind the con is a little like this:

Shares are distributed to insiders at a discount to the initial float price. These insiders can be people who work at the company, initial investors, etc. -- but the insiders are also the investment banks underwriting the IPO, people selected by the investment banks underwriting the IPO, "special friends" who the banks have picked out to pass along a good deal., etc., etc.

All of these people are hoping for one thing and one thing only:

An astronomical instant rise in share price at the time of the public offering which allows them to dump the dump on unsophisticated "retail" investors before the price recedes.

During the dot-com boom and several times afterward, this scheme worked more or less as expected. An IPO was announced for a "hot" Internet property. The underwriting banks' PR units worked the media, the media pumped the stock, the company went public and insiders dumped shares onto naive regular folks who thought they were getting in on something at the ground floor -- and then the whole thing would bust.

The problem with the Facebook IPO was ...

Insiders couldn't find suckers to take the shares off their hands.

In fact, after an initial surge to around $45 a share, the stock began to tank, and was only kept above the initial price level by massive buying from the banks that underwrote the IPO:

At the end of the day, the banks had to buy $11 billion worth of Facebook shares, just to keep it above water. Out of $16 billion total initial float price.

Whoops.

And Monday won't be any better.

What does this have to do with the 1%?

Well -- when you are a parasite, frankly, you need a host to survive.

People like Mitt Romney, or banks like Goldman Sachs, are blood-suckers.

But what happens when you've already sucked your victims dry?

People just don't have the money -- or financial security -- that they need to buy into big new technology IPOs like Facebook. Who is Goldman Sachs going to dump their shares on, if normal retail investors aren't buying?

And further, how are the rest of their scams going to work?

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Sharoney, Pat K California, Ottoe, Thumb, Alumbrados, davej, DeminNewJ, coral, northsylvania, fcvaguy, Chi, MadRuth, melo, ogre, yerioy, Detlef, native, importer, dfarrah, PeterHug, bosdcla14, Noelle in MPLS, Shockwave, Sherri in TX, Wintermute, SanJoseLady, Aspe4, eeff, route66, Sandy on Signal, Voodoo, RFK Lives, gjohnsit, Walt starr, expatjourno, hubcap, davelf2, regis, Heart of the Rockies, RubDMC, opinionated, concernedamerican, kayebee, Babsnc, cskendrick, fugwb, wonkydonkey, whenwego, Agathena, KMc, Minerva, cosmic debris, mrblifil, Aquarius40, sngmama, michael1104, splashy, Cedwyn, sidnora, CoConut, dksbook, revsue, Redfire, Texknight, tidalwave1, Getreal1246, psnyder, hangingchad, annan, averybird, TexDem, Miss Jones, pat bunny, johanus, duncanidaho, potatohead, JimWilson, BMarshall, flatford39, DSC on the Plateau, Chirons apprentice, On The Bus, houyhnhnm, RebeccaG, Timbuk3, lcrp, BlogDog, Lilith, dailykozzer, dkmich, econlibVA, zerelda, randallt, tomjones, jcrit, Emmy, bibble, Gowrie Gal, Tirge Caps, Skennet Boch, Los Diablo, maybeeso in michigan, Tinfoil Hat, NoMoreLies, tle, Jeffersonian Democrat, ichibon, subtropolis, liberalcheesehead, democracy inaction, Erik the Red, Militarytracy, run around, grimjc, Simplify, Bcre8ve, citizenx, basquebob, dewtx, ChemBob, myeye, Brooke In Seattle, orson, Gary Norton, ratzo, fixxit, eru, Annalize5, Ianb007, Ex Con, majcmb1, Pam from Calif, Sun Tzu, aaraujo, Burned, komogo, Kayakbiker, Overseas, most peculiar mama, blue jersey mom, Mid10Dem, markdd, babatunde, jane123, sunbro, Ozzie, joeotter, Zack from the SFV, Ginny in CO, LivesInAShoe, Lisa Lockwood, sillia, turdraker, bunsk, bookwoman, Ekaterin, kkjohnson, Alan Arizona, DivaBabe, kathny, CJnyc, Jim P, Reality Bites Back, martini, third Party please, snazzzybird, althea in il, tommymet, Medium Head Boy, rcbowman, Kingsmeg, vigilant meerkat, Clytemnestra, tobendaro, Themistoclea, tonyahky, ActivistGuy, rl en france, seefleur, kestrel9000, mskitty, KenBee, The Wizard, Shakludanto, Naniboujou, VictorLaszlo, arlene, pengiep, luckydog, kck, blueoasis, TalkieToaster, global citizen, The Hindsight Times, gatorcog, Terminus, JVolvo, Preston S, ZombyWoof, boatsie, OMwordTHRUdaFOG, middleagedhousewife, hlsmlane, livjack, vivian darkbloom, anninla, BlueMississippi, bumbi, democracy is coming, profh, fiddlingnero, Stripe, means are the ends, blueoregon, zedaker, lynneinfla, nannyboz, Statusquomustgo, Bernie68, bstotts, 20shadesofviolet, Hedwig, AllanTBG, Nulwee, cpresley, One Pissed Off Liberal, old wobbly, pgm 01, RWood, john07801, out of left field, bluicebank, Loudoun County Dem, Deadicated Marxist, ksp, devis1, leftyguitarist, jds1978, Brix, FishOutofWater, la urracca, some other george, Jimdotz, terabytes, dclawyer06, Strabo, bnasley, rantsposition, NoMoJoe, tcdup, SeaTurtle, millwood, Moderation, jhop7, Wreck Smurfy, uciguy30, leonard145b, madgranny, JML9999, Zydekos, bewild, janatallow, trueblueliberal, Empower Ink, GANJA, angry hopeful liberal, TheFatLadySings, Steve15, OleHippieChick, prettyobvious, bythesea, theunreasonableHUman, skohayes, KJG52, Calamity Jean, Lujane, Cassandra Waites, Hanging Up My Tusks, icebergslim, Jake Williams, pickandshovel, triplepoint, Tam in CA, codairem, Gemina13, glendaw271, petulans, get the red out, Karl Rover, Blueslide, Karen Hedwig Backman, Executive Odor, magicsister, pilotmama, tristan57, dmhlt 66, sydneyluv, toom, DavidW, tuckerm, maxcat06, prettygirlxoxoxo, BerkshireDem, Bule Betawi, pileta, Kansas Born, emboyo, greengemini, The Dead Man, juca, Dopeman, bsmechanic, banjolele, Carol in San Antonio, LeftOfYou, Nebraskablue, pvlb, Zotz, killermiller, CamillesDad1, dRefractor, RageKage, zizi, mksutherland, COwoman, kevinpdx, histOries Marko, IreGyre, nancat357, astral66, Words In Action, ruscle, Just Bob, Renie57, roadbear, Rustbelt Dem, michelewln, Hoosier Al, Crabby Abbey, wvmom, Simple, JoanMar, tellthestories, cordgrass, pixxer, jim283, elengul, ericlewis0, Floande, cocinero, leu2500, fiercefilms, Actbriniel, ciganka, According to Fish, Jasel, TAH from SLC, Bluefin, NJ elitist, ozsea1, StateofEuphoria, slowbutsure, BPARTR, FarWestGirl, emilymac, CoExistNow, boomerchick, marleycat, susanala, thomask, slooterdam, Wheever, KVoimakas, SueM1121, floridablue, LSmith, Sark Svemes, organicus, sound of progress, Miggles, SteelerGrrl, jadt65, Rashaverak, PrometheusUnbound, No one gets out alive, Azazello, brown and blue all over, Only Needs a Beat, jacey, stormicats, gnostradamus, leathersmith, MikeMcShea, Siri, IndieGuy, LefseBlue, Joieau, a2nite, Trotskyrepublican, Horace Boothroyd III, dog in va, Mr Robert, HypocrisyWatch, Free Jazz at High Noon, Syoho, MartyM, OllieGarkey, Grabber by the Heel, notdarkyet, cassandracarolina, rat racer, AverageJoe42, Glen The Plumber, George3, katiec, mumtaznepal, NeuronFlash, peptabysmal, Windowpane, maf1029, Robynhood too, lastlegslaststand, Phoebe Loosinhouse, Sue B, BobTheHappyDinosaur, Captain Chaos, whatGodmade, DamselleFly, kickthecan, SanFernandoValleyMom, Yo Bubba, Jeff Murdoch, helpImdrowning, Icicle68, Mannie, Smoh, Avilyn, tngirl

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site