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But it sort of does imply that. Here's the reasoning -- There's a liquid market of a lot of shares trading hands at $40+. Anybody who bought a share at $26 kn
by chrislipa 13y ago
But it sort of does imply that. Here's the reasoning -- There's a liquid market of a lot of shares trading hands at $40+. Anybody who bought a share at $26 knows he or she can sell today for $40+. To a first approximation, choosing not to sell at $40 has roughly the same effect as choosing to buy at $40. If the price is supported at $40+, that's at least very suggestive evidence that enough buyers could have been found at that price in the first place.
- deleted 13y ago[deleted]
- prostoalex 13y agoThat $40 floor exists once the market starts trading and there's external confirmation and safety in numbers. The IPO process is more or less bankers emailing clients asking "Hey, want to buy this brand new company at $26? How about $32?" You essentially have to make a decision without information on how other buyers behave, which forces conservative behavior.
- chrislipa 13y agoYea, I get it. I'm just saying it's suggestive, not conclusive.