LinkedIn's founder just got screwed out of millions of dollars and he probably doesn't even know it:The stock of LinkedIn opened explosively Thursday morning, rising to more than 100 percent of its IPO price.
This means the favorite clients of LinkedIn’s underwriters—Morgan Stanley, Bank of America Merrill Lynch and JPMorgan Chase—are making a fortune. They got to buy in at $45 a share—and have doubled their money instantly.
It also means that LinkedIn’s owners and investors just got swindled. ...
A 100 percent rise is evidence that LinkedIn’s shares were wildly, almost fraudulently, underpriced. The bankers either had no clue about the price people are willing to pay for the shares—or they decided to grant their best institutional investment clients a bonanza at the expense of LinkedIn.
It appears a lot of small investors may have been screwed too. Here's how it happened. LinkedIn only sold a small number of shares. This meant that small investors wanted to buy more stock than was available. If they stupidly placed market orders instead of limit orders, they bought the stock regardless of the price.
Ignoring the price is stupid! Whether an investment is a good one or a bad one depends entirely on the price you pay.
LinkedIn's founder just got screwed out of millions of dollars and he probably doesn't even know it:
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