Google priced 24.6 million shares of its IPO at the astounding level of $100+ dollars.
That’s $3.3 billion worth of stock — on the opening tick, Google would have a market cap of $36.3 billion (if it prices at $135). Compare that to eBay’s $48.5 billion cap, Yahoo!’s $37.5b, and Amazon’s $15.7b. (Not too shabby!).
Is Google worth one Yahoo, or two Amazons or 3/4s of an eBay? That’s what they are betting with this pricing.
On the one hand, you have to admire Google’s desire to capture as much of the value of their IPO for their own corporate usage as possible. In the bad old days — starting with Netscape, and continuing on until the bubble burst — all of that excess capital from astounding opening day pops went everywhere and to everyone BUT the company: Bankers, hedge funds, traders. A firm would raise a 100 million or so, and watch as it left billions on the table.
Of course, the insiders didn’t care as much ’cause they had options, and so (on paper at least) they were wildly rich.
But without an incentive to support the stock, will Wall Street analysts and marketmakers keep Google’s (GOOG) share price sky high? Some feel that they may have overreached a bit.
Now that Google has rewritten the rules for Search, they are trying to rewrite the rules on Wall Street; They may find the algorthms of the Street far less controllable than mere software code . . .