Baidu Has A Bubble-rific Debut

from the bad-bankers dept

Well, apparently investors didn't care that Baidu is about to lose its main differentiating feature (the ability to download free music and movies). In the pursuit of new dot com bubble mania, investors drove the stock up 354% in its debut (though, actually, it's not clear that number is accurate -- my calculation of the price jumping from $27 to $151 suggests about a 460% increase). We haven't seen that sort of first day bump since the bubble years, so it might be worth breaking out the old IPO lesson for those who have forgotten it. While this sort of news excites people and makes them think that this was a successful IPO, it's actually the opposite. It means the investment bankers did a horrible job of pricing the shares -- leaving a ton of money on the table that should have gone to Baidu, but instead went to people (friends of the investment bankers, of course) who immediately flipped their shares.
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  1. identicon
    GunGeek, 8 Aug 2005 @ 7:46am

    How they got 354%

    They used the closing price, not the high for the day. Seems most of the stock market types have a real affinity for the open and close prices. Not sure how they'll handle things when the markets go to 24x7, which will happen one of these days as they get more computerized and more global.

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