Felix Salmon

The rational Candy Crush IPO

By Felix Salmon
March 10, 2014

Jim Surowiecki is absolutely right about the IPO of King Digital Entertainment, the makers of Candy Crush Saga. The point of an IPO is to raise permanent capital for a company which intends to exist in perpetuity, while King will realistically last only as long as the Candy Crush fad. King will probably never again make the kind of money ($568 million) it made last year, and yet it issued options in January at a crazy $9.4 billion valuation.

Facebook’s SecondMarket muppets

By Felix Salmon
May 30, 2012

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Remember how excited SecondMarket was about the Facebook IPO? I’ll bet they’re not nearly as excited any more. Because if anything demonstrates that there’s a venture-capital bubble in Silicon Valley right now, it’s Facebook.

Chart of the day: Do IPOs create jobs?

By Felix Salmon
May 29, 2012

In the wake of its fabulous report about how investors in VC funds are stupid, the Kauffman foundation has released another report, this time about IPOs. This one comes with a very bad press release, which says in breathless fashion that “nearly 1.9 million new jobs forfeited in the past decade as fewer entrepreneurial firms join ranks of public companies”. In fact, the report itself is much less alarmist, and a single chart does a very good job of debunking the idea that if we had more IPOs, we’d automagically have much more employment.

Morgan Stanley’s $2.4 billion Facebook short

By Felix Salmon
May 21, 2012

Matt Levine had a very wonky post on Friday afternoon about the dynamics of the Facebook IPO in general and of the very misunderstood greenshoe option in particular. Now that we’ve all had a nice relaxing weekend, it’s maybe worth revisiting that greenshoe, because it’s actually possible, given Facebook’s tumbling share price today, that Morgan Stanley will make a substantial amount of money on it.

Chart of the day, tech-stock edition

By Felix Salmon
November 23, 2011

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Paul Kedrosky reckons that Groupon’s the worst-performing internet IPO since Netflix, in 2002. He’s wrong: Groupon is doing even worse than Netflix did. It’s now trading at 85% of its IPO price; Netflix, by contrast, was still a tiny bit above its IPO price at this stage in its volatile history. (The chart above shows how Netflix performed in its first year as a public company, compared to its IPO price.)

The US IPO cartel

By Felix Salmon
June 7, 2011

Mark Abrahamson, Tim Jenkinson, and Howard Jones, of Oxford University, have an utterly compelling paper out proving that there’s collusion among investment banks in the US — it doesn’t matter whether they’re European or American banks — to keep IPO proceeds set at 7%. Using a very high-quality new dataset, they compare US and European IPOs, and get the following result:

The LinkedIn pop

By Felix Salmon
May 19, 2011

Why is LinkedIn doing so well on the stock exchange today? At $100 per share, by one measure it’s the most expensive stock in America. Evan Newmark has one theory: it’s because the IPO price was raised, by Morgan Stanley, by $10 per share shortly before the offering was launched. By doing that, he says, they increased the size of the pop: