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July 27, 2004

Don't Bid on Google IPO...

Dan Gillmor, of the San Jose Mercury News, writes today in his blog on why he wouldn't bid on Google's IPO. He writes, in part

There are growing questions in some circles, meanwhile, about Google's basic trustworthiness. It has already alienated some advertisers, for example, and operates with cult-like secrecy. If the company loses people's trust -- which is a key asset -- it could lose much of its value.
To justify bidding at the prices Google hopes to get, you need to believe the converse of the risk factors. You need to assume that almost everything will go right in the next few years. It may, but that is one powerful collection of assumptions.
Given the unique dutch auction pricing method, the issue is almost sure to be priced such that people willing to pay the most will get their shares... so it is highly unlikely that anyone will be left to bid the issue higher. This alone is enough of a reason to avoid the auction process, aside from Gillmor's concerns of the company's trustworthiness. If you really want to own this stock, buy it after it has had a chance to settle after the IPO. It will almost certainly go down before it goes up again.

July 27, 2004 in Tech Stocks | Permalink

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