Zipcar Inc. (Nasdaq:ZIP) goes public and the share price nearly doubles starting with the first open trade. Who got screwed on this one? The valuation was clearly inaccurate as measured by the market.
What ever happened to underwriters trying to maximize the price at the offering? Existing shareholders are faced with unnecessary dilution. The market clearly would have paid more per share. The number of shares outstanding could have been less. EPS would have been way better on a going forward basis. Also you now have a horde of speculators trying to protect profits and waiting for the inevitable share buy back financial engineering as desperate CFO’s try to manage EPS growth.
The market is never wrong as they say except when it changes its mind. Underwriters rely on speculative fever to promote the stock. Investors are looking at increased share prices and believing they are richer than before. But no one is counting on the dilution issue. What we need is a good lawsuit from a pre-IPO investor who is not happy with dilution disguised in speculative fever.
Disclosure: “George Gutowski” writes from a “Caveat Emptor Perspective”. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.
- ZipCar’s IPO Underwriters Just Screwed The Company To The Tune Of $50 Million (businessinsider.com)
- IPO Watch: Someone Got Zipcar Very Wrong (ZIP) (247wallst.com)
- Zipcar IPO Soars 66% Out of the Gate (blogs.wsj.com)
- Did Zipcar Get Swindled on Its Massive IPO? (theatlanticwire.com)
- Zipcar IPO Arrives Hot (ZIP) (247wallst.com)
- “Zipcar Stock Price Increases 56% On First Day Of Trading” and related posts (pulse2.com)
- Zipcar prices IPO above range at $18 (marketwatch.com)
- Demand For Zipcar’s “Cultlike” IPO May Be “Massive” (blogs.wsj.com)
- Zipcar IPO raises $173M, beating expectations (bizjournals.com)
- Zipcar shares soar in market debut (seattletimes.nwsource.com)
- Ready to Ride: Zipcar Prices Upsized IPO Above the Range (seekingalpha.com)
- ZipCar Shares Up Over 50%, Market Cap Surpasses $1 Billion After IPO (techcrunch.com)