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Google's Pivotal IPO Launched a Decade of Big Bets
Google's Pivotal IPO Launched a Decade of Big Bets
By Michael Liedtke Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
AUGUST
19
2014
(Page 2 of 3)

In another break from tradition, Page and Brin set up a bidding process known as a "Dutch auction" designed to give a larger pool of investors an opportunity to determine the IPO price and buy the stock before it began trading on Nasdaq. This differed from the usual system that depends on bankers to set the IPO price and distribute the pre-trading shares to their preferred clients, who often expected to get them at a slight discount.

Page and Brin didn't help Google's cause. They showed up to investor presentations in casual attire and then answered questions with off-the-cuff remarks that provided little information. Things got even more complicated when a Playboy interview done with Page and Brin in April came out in early August as the IPO was heading into the stretch. The piece revealed that Google hadn't properly registered millions of its shares with California regulators. Officials initially viewed the interview as breach of rules that forbid companies from sharing key information outside of IPO documents, but eventually the agency backed down when Google included the entire Playboy interview in an amended filing.

Google's IPO ended up being priced at $85, well below the company's earlier target range of $108 to $135.

BOON FOR BARGAIN SHOPPERS

Investors who bought Google's stock on the first day of trading have been richly rewarded. The shares rose 18 percent to close at slightly above $100 on in their Wall Street debut and have never fallen below the IPO price. Adjusted for a split completed earlier this year, Google's stock has risen roughly 14-fold, leaving the company with a market value of nearly $400 billion. Only Exxon Mobil Corp. and Apple Inc. are worth more.

Apple didn't fare quite as well as Google in the first decade after its December 1980 IPO. Apple's stock merely tripled in value during its first 10 years of trading. By comparison, Microsoft Corp.'s stock had soared 90-fold a decade after its March 1986 IPO and Amazon.com Inc.'s stock had climbed 40-fold a decade after its May 1997 IPO.

Google's performance helped stoke demand for the IPOs of other rapidly growing Internet companies. Facebook Inc. would never have been able to command a market value of $104 billion when it went public in May 2012, nor would Chinese e-commerce conglomerate Alibaba Group's expected IPO value be at $150 billion if Google's IPO hadn't performed as well as it had, said longtime IPO expert and University of Florida finance professor Jay Ritter. (continued...)

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