There's an optics component to pricing an IPO. If your shares surge and stay higher than the IPO price for several months, people view that as a positive sign. I'm not saying it makes sense, but it's definitely something that you will see research analysts discuss when talking about newly-public companies. Keep in mind that big players in the equity market are sophisticated about financial reasoning, but not necessarily well-educated when it comes to the technology itself.
When you aren't sure how to value the assets and business of a company, optics unavoidably make a difference in the way you trade the company's stock. Look at all these software and tech services companies that are priced off of wonky numbers like EV/sales multiples if you don't believe me.
If people see a strong bid, they may be more likely to perceive it as bullishness, which influences their own trading decisions. As a result, the company may actually end up with a higher eventual valuation once the IPO dust has settled and the price has found an equilibrium.
Not to mention that the offered stake isn't the whole company.
When you aren't sure how to value the assets and business of a company, optics unavoidably make a difference in the way you trade the company's stock. Look at all these software and tech services companies that are priced off of wonky numbers like EV/sales multiples if you don't believe me.
If people see a strong bid, they may be more likely to perceive it as bullishness, which influences their own trading decisions. As a result, the company may actually end up with a higher eventual valuation once the IPO dust has settled and the price has found an equilibrium.
Not to mention that the offered stake isn't the whole company.