[bokonist]

That is not the correct way to think about it.

Say that the initial offering is for 10 million shares at $20 a share. Then the price pops to $30. That $30 share price is based on a much smaller net influx of investment. It does not follow that you could have sold 10 million of shares at that price. The $20 price is a discount that is needed to make the market clear a very large number of shares, all at once. Furthermore, the pop to $30 only happened because retail investors know that the institutions buying into the IPO are reputable, long-haul investors like Fidelity, who will not be dumping the stock immediately. So if you don't have Fidelity and other reputable investors putting in money at $20, you will never get the pop to $30. And because of their size and reputation and relationships, institutions like Fidelity will be able to command discounts, like any big buyer can. The IPO-ing company generally needs Fidelity much more Fidelity needs to buy the company's stock. Thus Fidelity can command the discount.

[jackgavigan]

> ..retail investors know that the institutions buying into the IPO are reputable, long-haul investors like Fidelity, who will not be dumping the stock immediately.

From the article: "The first trade was 15% of all of the shares offered during the pricing."

Institutional investors "consistently flip a much larger percentage of the shares allocated to them than do retail customers."[1]

1: http://faculty.msb.edu/aggarwal/jfeflipping.pdf

[joezydeco]

Facebook didn't leave money on the table, and there were cries that the IPO was a disaster. Wonder why that was.