So many stories of legend come to mind when an IPO goes off the cliff. It brings back the old pools of pumping news and assurances while the Charleston plays and Prohibition offers the greatest of times.
But from 23 deals made since 2011, only 4 have seen a drop in price. In the other side of the counter, Citi, UBS, and e-Trade counting their missing beans offers beyond reasonable doubt, the idea that the technology glitch was a major dreams popper.
It is probable that the underwriters bought into the hype treating the market as an unexpected and unpredictable beast without realizing that in such a large offering, they are the voice of reason and the market maker. An 800 hundred pound gorilla has its name because it is singular in a plural world.
The warnings to major partners carried the same content that everyone already knew. It might not be a sign of asymmetrical information. I think it is a sign of asymmetrical perception of our own roles when failing to realize this is just not one more offering; this is The Offering.
This is one of those times when it would be so nice if the SEC could say after reminding the underwriters of their fiduciary duty to the offering and the public:
OK. Now, let's try that again: what is the price supposed to be?
