It was priced at approximately $26 last night and the first trade was $44 today. The big investment banks like Goldman and Morgan Stanley were the underwriters. It made a lot of millionaires. I am jealous. Goldman reportedly only charged Twitter about $40 million for the deal. Who made the most money? Of course the shareholders of Twitter made a bundle. But who else? The large clients of Goldman and Morgan, that's who. How so?
They agreed to purchase twitter at $26 yesterday and sold today for $44. It was the sweet smell of success. It is the prize that the big clients of the investment banks receive for loyalty. The underwriters agree to pay Twitter $26 per share which they sell to their clients and which most of their client are able sell the next day at a whopping profit. It is a wonderful system. Instant money for the whales of the investment banks. It happens all the time. I used to be a whale and if I was lucky enough to get 1,000 shares of a new IPO as in the case of Twitter for example, I would have made a nice profit $18,000 in less than 24 hours with virtually no cash up front and no risk. Money makes money.
If Obama finds out where his advisors end up in the private sector, he will legislate an IPO Tax arbitrage for the wealthiest players. Wall street, they do not call it that because it is easy to get over.
They teach these IPO things in business school. Understanding business comes from recognizing emotion to find the smoke, but always follow the cash to find the fire.
webtalkwithbob@gmail.com
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