After more than more than three months of filings with the Securities and Exchange Commission, public miscues, pricing changes and enough legalese to make a lawyer dizzy, Google's initial public offering is one for the record books.
Experts at Wharton and elsewhere say Google's IPO, on the surface, seems to be a success, but they note it's too early to issue a verdict. After all, Google did raise $1.67 billion by going public at $85 a share - but that's down from the $135 a share top target, or $3.6 billion, that the company was hoping for. And Google raised its capital largely thumbing its nose at Wall Street's typical method of going public, opting instead to use a Dutch auction that in theory would put shares in retail investors' hands and cut down on commissions to investment bankers.
"The jury is still out on whether the IPO is a success or not," says Wharton management professor Raffi Amit. "The fact that Google did a Dutch auction is a good thing. The company managed to float an offering when 10 deals were cancelled in the two weeks before. Google managed an IPO in a soft tech market."
Wharton marketing professor Peter Fader agrees, to a point. He says the way individual investors chased Google like lovelorn puppies the first day of trading is a sign that some folks will never learn. But if they can't remember lessons from the dot-com boom, maybe they can pick up a few in the aftermath. Here are some lessons from Google's IPO.
Going Dutch Isn't Easy
Amit is a supporter of Dutch auctions, where investors bid on an initial public offering before it goes public. The benefits are clear. In theory, a fair market price is set and the company reaps more cash. In traditional IPOs, prices are set low to ensure a big first day run for investment banks and their clients.
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