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Stock Thread (23 Viewers)

I've been underwater on ETHE from the day I bought until yesterday. Strongly tempted to blow it out while I can, but will try to catch any pin action today. I don't know.

 
JAA said:
GCV slowing making strides.  Its a @Todem-tastic play.  Are we long here or do we have an exit number?
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Long long long. Collect that yield and compound this baby.

identikit said:
Same for me.

someone sent up the bat signal to @Todemtoday for his opinion.
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Sit tight. We will weigh in later today. If an 11% downward move spooks you.......I am sorry but equities are not for you. 

You have to be in a long term mindset. That is my mindset when I buy stocks. 

But I will check in later. I have been extremely busy. But the short answer is......the company is solid as a rock, sit tight and we are evaluating the “headlines risk” and weighing the long term outlooks for this very strong company.  And I have said it before.....headline risk presents opportunity on real good companies. I am not going to suggest averaging down if you already have at most a 5% allocation to it. If you are at that level sit tight. If you are only sitting on 1-4% total weighing take it up to 5% max of your total holdings. 

That is the risk management discipline.

 
drunken slob said:
Good question  :thumbup:

I've been trying to find a reason to sell any of the $GCV or $PBFX that I got last quarter. Both are staying strong and I'm going to stick to the boring dividend plan that got me in those to begin with.

The only dividend ticker that makes my heart flutter is $SLVO. I keep clocking dollars with it though :notselling:

:banned:
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How does SLVO have a 32-33% dividend yield? Is that for real? Is it sustainable?

 
J&J's vaccine is under review today. Not sure when the results will be announced but I'll hold EBS until then. I'm only holding for the short term so obviously hoping good news to sell on the pop.

 
Kramer doing his best to pass all the blame to EBS for JNJ’s troubles. 

Clown. He is the absolute worst in the business media....bar none. 

Total clown. Always has been always will be. Like he knows what is going on in labortories. I mean WTF is this. Total yellow journalism.....I can’t even call it journalism. This is business porn. 

Clear signal this will pass soon. 

Again I will evaluate what is going on so sit tight.

 
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For those who like sector ETFs, any thoughts on BUYZ? 

Disruptive commerce ETF. top holdings are SE, Amazon, Shopify, and some others we've liked. Obviously Amazon is holding it back from 🚀

 
Wish I could find the post from a few weeks back but I was clear and saying that when a little guy like MoP is buying Doge which at the time had "soared" to about 6-7-8 cents a share and stayed there for many weeks, fell into the 5 range and then POP it goes up to over 13 cents a share, even if you suck at this you are up like 50% if not much higher. 

I'd love to tell you I invested in it like Elon Musk but unfortunately was only playing around with small time funds on these, $10 here, $20 there, we got in for maybe $50 on DOGE but it's pretty tempting to uncork a lot more into these. They are very volatile of course but when they renamed the American Airlines Arena in Miami to a cryptocurrency it seems obvious even if you know nothing about that vertical and even if the term crypto feels scary and creepy, the reality is people are using them for whatever reason. I don't use Facebook but that doesn't mean folks don't flock there. 

I still think it's a good buy, 25 to 50 cents by the end of summer and a $1 by Christmas!

The MoP KoD right there 

 
Bob Sacamano said:
Ref price is $250? That's a $50B valuation. Last private auction value was $350-$375. I'd think those are our guiderails for open, but :shurg:. 
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It’ll open close to $600. Good if you got in on the IPO or already owned shares but it’ll probably be like SNOW which in 7 months is up about 1% from the opening price. Compared to other tech like MDB (also in the database area), which is up 50% since SNOW went public, SNOW was a very bad buy. Even though the rest of tech is still way down from the top they are all way up compared to SNOW. You maybe be able to make a quick buck on COIN but likely it’s not a good long term hold since it’ll be fully valued today.

 
stbugs said:
It’ll open close to $600. Good if you got in on the IPO or already owned shares but it’ll probably be like SNOW which in 7 months is up about 1% from the opening price. Compared to other tech like MDB (also in the database area), which is up 50% since SNOW went public, SNOW was a very bad buy. Even though the rest of tech is still way down from the top they are all way up compared to SNOW. You maybe be able to make a quick buck on COIN but likely it’s not a good long term hold since it’ll be fully valued today.
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There is no getting in on the IPO. It's a direct listing.

 
Bob Sacamano said:
There is no getting in on the IPO. It's a direct listing.
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Ah, didn’t realize it was like that. So, how does that work? If they say there’s 1 million shares available do they go at $250 to the first million people that bid or are the brokers that are doing the offering give out shares to the highest bidders?

 
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Ministry of Pain said:
Wish I could find the post from a few weeks back but I was clear and saying that when a little guy like MoP is buying Doge which at the time had "soared" to about 6-7-8 cents a share and stayed there for many weeks, fell into the 5 range and then POP it goes up to over 13 cents a share, even if you suck at this you are up like 50% if not much higher. 

I'd love to tell you I invested in it like Elon Musk but unfortunately was only playing around with small time funds on these, $10 here, $20 there, we got in for maybe $50 on DOGE but it's pretty tempting to uncork a lot more into these. They are very volatile of course but when they renamed the American Airlines Arena in Miami to a cryptocurrency it seems obvious even if you know nothing about that vertical and even if the term crypto feels scary and creepy, the reality is people are using them for whatever reason. I don't use Facebook but that doesn't mean folks don't flock there. 

I still think it's a good buy, 25 to 50 cents by the end of summer and a $1 by Christmas!

The MoP KoD right there 
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I take the first part of the bold as another bubble sign. As to the latter: people aren't using crypto, they're just speculating in it. Also wasting a tremendous amount of energy to mine it.

 
McBokonon said:
It’s already indicating at 340. 
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Do you know how the direct listings work? Is it like all the insiders that are selling stock have all the shares in their accounts and they just decide what prices they are willing to sell them at? I guess kind of like an IPO except the retail/outsiders don’t get the shares at a fixed price? For instance could all the insiders just decide to sit on their shares until the bids go up higher?

 
stbugs said:
Do you know how the direct listings work? Is it like all the insiders that are selling stock have all the shares in their accounts and they just decide what prices they are willing to sell them at? I guess kind of like an IPO except the retail/outsiders don’t get the shares at a fixed price? For instance could all the insiders just decide to sit on their shares until the bids go up higher?
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Pretty good primer:

Twitter

For startups seeking to build a sustainable and enduring business, we’ve covered a lot of the strategic financing milestones along the way — from mindsets for startup fundraising to when and how to build a finance function with a CFO to what it takes to do an initial public offering (IPO). There’s also a lot that goes on behind the scenes en route to IPO, including how they’re priced, that may affect company building.

But an emerging trend to now pay attention to is tech companies doing a Direct Listing instead of a traditional IPO as a route to the public markets. Spotify started this last year, and Slack just did it last month. Both of these companies debuted on the New York Stock Exchange (NYSE), and so had all the outward trappings of an IPO, from ringing the bell to a specialist on the floor of the NYSE opening the stock for trading. 

However, in a Direct Listing, no shares are sold by the company itself, and therefore no capital is raised. So why would a company do a Direct Listing? What are other key differences between an IPO and a Direct Listing? And what are the tradeoffs involved in this new approach? Since the Direct Listings process is so new, I try to demystify the topic in this post given my own vantage point immersed in the capital markets (including behind the scenes with Slack, where we’re investors). What are Direct Listings, how do they work, and why do they matter? 

What are the differences between a Direct Listing and an IPO?

The biggest difference between an IPO and a Direct Listing is that there is no “o” — that is, there is no offering from the company selling its stock to public investors. Besides this and a few other substantive differences that I’ll cover, the differences between IPOs and Direct Listings mainly boil down to the order of operations. The activities in both processes are actually rather similar — registration, investor education, trading, and so on — differing mainly in what happens when, and in some cases, how. 

There is also no formal book-building roadshow in a Direct Listing. In a traditional IPO, the company going public literally goes “on the road” with their underwriter (the investment bank) over an intense two-week period for back-to-back, intimate meetings with potential investors. They do this is not just to market their company story, but to enable the management team to build relationships with investors — typically, large institutional investors — and for those investors to then submit orders to purchase shares (“building the book”) at the end of the process.

While the company does go into the IPO roadshow with an initial filing price range that indicates the listing price, it will often adjust that price based on the “market” feedback from these meetings with investors. In a legacy IPO process, this initial filing range is the first price that will be associated with a company going public; the second price is when the company actually sells the stock to institutional investors — the IPO pricing. And the third price — the actual opening price of the stock the day after IPO pricing — will be determined at the exchange where the stock is listed, based on market supply and demand; this is referred to as the trading price. 

But how does the company arrive at the IPO price in the first place? Back to the book of orders: the company and its underwriters will try to determine from that book the price at which they can sell shares that target the most desirable group of investors for the company. They  — particularly tech companies that want to continue their product innovation — are seeking investors who “get” their company, and who will support them in the markets long term. 

There is a fine art to this entire process, from the art of relationship building to the art of pricing — but it’s basically all about assembling the right mix of investors at the right price (by IPO standards). The goal is to allocate just-enough stock for investors to care about their stake in the company, and get meaningful appreciation right away… yet also still be a buyer of additional shares in the future. Pulling this off involves all kinds of circus hoops, from discounting the IPO pricing and orchestrating the IPO “pop” (an initial bounce in price that superficially indicates a win on the first day of trading), to ensuring the company has lined up future growth in the form of new products, initiatives, or markets (as my partner Jeff Jordan often counsels companies to do in advance of IPO).  

Of course, such planning, investor education, and relationship building matters in a Direct Listing, too — only here the roadshow is replaced by an “Investor Day”, where the company invites investors to learn about them one-to-many, including via a webcast. In this way, Direct Listings can be considered more democratic because everyone has access to the same information all at once.

The company will also meet 1:1 with the largest and most influential investors, accompanied by its capital market advisors. Note, these advisors are still investment banks (for example, Morgan Stanley was an advisor in both Direct Listings completed to date) — but here the banks play a slightly different role than being underwriters (the actual purchasers and resellers) as they are in an IPO. Despite the similar players and activities, though, the investor meetings part of the Direct Listing process is much more limited in scope compared to the schedule for a traditional IPO roadshow. Most notably, there is no solicitation of orders from investors as with the bookbuild process in a traditional IPO, because the company is not selling any shares. 

There is a fine art to this entire process, from the art of relationship building to the art of pricing — but it’s basically all about assembling the right mix of investors at the right price

An argument could be made that in these ways, the Direct Listing accomplishes many of the goals of the roadshow and at a “truer” market price for the stock (more on that later). The company doing the Direct Listing also publicly provides prospective investors forward-looking financial guidance — in a form similar to earnings calls and press releases — whereas in a traditional IPO, no forward-looking guidance is issued until after the IPO has been completed (usually at the first quarterly earnings release). This is because in an IPO, the S-1 registration is filed, but not declared effective, until the night of pricing (the day before initial trading); therefore, the company can’t provide advance guidance without violating SEC rules. In a Direct Listing, however, the registration is effective well in advance of trading (10 days prior in the case of Slack), so the company can provide such forward-looking guidance before the stock starts trading. In this way, Direct Listings could also improve a structural issue with current IPO timelines.  

Finally, another substantive difference between a Direct Listing and an IPO is in the lock-up period: In a traditional IPO, existing company shareholders agree to a period, typically 180 days from the date of the IPO pricing, where they are restricted from selling, hedging, or distributing shares. While they are not mandated to do so by the SEC, investment banks usually ask for this because it allows for a set period of time for the company’s shares to trade and establish a track record. Having a set amount of stock (the float) available for trading theoretically provides more predictability, allowing the stock to stabilize a bit before more share volume comes onto the market. On the other hand, the float in a typical IPO is such a small amount — usually ~10% of the company’s total stock — that this artificial restriction also forces distortions for both investors buying large amounts (who have to build up their position gradually and typically have to wait until after the lock-up expires) as well as for others seeking the stock’s true price (not enough volume in the true market of sellers and buyers to determine it). 

One last point: Direct Listings are much cheaper to do than an IPO. Given that the fees involved are far less important than getting to the right outcome, I only point this out since it’s another difference between the two methods. Currently, the IPO underwriting fee is based on a percentage of the proceeds raised by the issuing company: typically ~7%, although some larger high-profile IPOs have gotten underwriting fees as low as ~2%. In a Direct Listing, the fee is a flat advisory fee, and is about half of what the smallest underwriting fee for an IPO would be. 

How do Direct Listings work?

As mentioned, the major activities of Direct Listings and IPOs — from registration to investor education — are not that different, but the nuances of when and how they happen do matter. Since IPOs have been around for centuries and are more broadly familiar, let’s focus on the major phases of doing a Direct Listing.  

Preparation

The preparation process for a Direct Listing is actually very similar to an IPO. Note that by the time the public sees an S-1 from a company going public, it’s already been in process privately for a few months beforehand:

The company files an S-1 registration statement with the SEC, typically through a confidential filing. 

The SEC will review the S-1 form, share comments, and ask clarifying questions. 

In parallel, the company will conduct investor education meetings, and prepare materials for their Investor Day. Forward guidance is not allowed during this period since the S-1 is not yet effective. 

There is also a quiet period while the company is in registration, during which all public statements made from the company and by Affiliates (board members and major investors) must follow careful rules — who, what, when — so as not to hype the stock before trading. 

After the initial review period, the company will then flip to a public filing (the company decides when), where investors, and the public, will see the amended S-1 registration statement, still in draft form, for the first time.

Before listing

The next phase — beginning about 5 weeks prior to the first day of trading — is where the Direct Listing process begins to diverge from a traditional IPO process:

The company will invite investors to their Investor Day, where they will publicly talk about the company and financial results — though still only about historical performance. 

The company will also still meet with investors 1:1, as mentioned earlier, to build demand, build relationships with investors, and build trust in management — but not build a book. 

The SEC will at some point in this phase declare the S-1 registration statement effective, which will permit the company to publicly announce forward-looking financial guidance. This allows investors to hone in on what price they would be willing to pay for the company’s shares at least 1-2 weeks before the stock goes public. 

Trading

During this final phase, current shareholders in the company will also begin to determine at what price they would be willing to sell their stock — remember, the company itself is not the one issuing stock for sale. In any market, there must be shares for new investors to buy — liquidity — which is only made possible by existing shareholders selling. The company will already have turned off any trading of company shares in the secondary markets by this time. 

The day before trading begins, the stock exchange — in consultation with the company’s financial advisor — will declare a reference price. This price is the closest analog to the initial filing range in a legacy IPO process, but is really just a guidepost that informs the public of recent private trading activity. In the case of Spotify, the reference price was the last private secondary trades. With Slack, it was closely informed by the volume-weighted average price (VWAP) of the recent secondary trading activity, but was not the exact VWAP. Unlike in an IPO, where the initial filing range will at least initially be closer to opening price, the reference price in a Direct Listing does not actually serve a material purpose in this process. (The unspoken truth may even be that a reference price is set in a Direct Listing to satisfy the legacy IPO machinery that reinforces the public’s obsession with pops and prices going up on a stock opening day.) 

Early in the morning on the first day of trading, an auction commences — first indicating size of demand, and then at what price as supply and demand starts to build. Buyers and sellers will adjust their orders for several hours as the market begins to hone in on the equilibrium price. In the case of Slack, it took about 2.5 hours after the open of the broader market to commence trading, which was faster than most participants expected;  supply and demand built at a higher level of volume fast enough that the market maker (the person designated on the exchange) chose to open the stock sooner. 

There is a similar trading dynamic to determine prices in legacy IPOs, but the volume of shares trading there are restricted because only new shares are sold to new investors for the first 180 days (with some shares intentionally placed with investors who will sell for a quick profit, and smaller allocations given to investors who wanted more). Compared to this, there is a truer view into supply and demand in a Direct Listing.
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Is the big difference between Coinbase and SoFi, or other crypto buying platforms the integrations it has with wallets and being able to use crypto as currency and not just an asset?

Just trying to rationalize how one can be valued around $2B and the other $60B.

 
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beef said:
Is the big difference between Coinbase and SoFi, or other crypto buying platforms the integrations it has with wallets and being able to use crypto as currency and not just an asset?

Just trying to rationalize how one can be valued around $2B and the other $60B.
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I read the Coinbase has 52 million customers, I am not sure how that compares to SoFi. 

 
JerseyToughGuys said:
Pretty good primer:
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That’s interesting. Seems like they are trying to find a starting price but do they fill all orders at that price and what if the demand isn’t met (shouldn’t happen here). If you put a bid for $340 and the equilibrium is $310, do you fill the order at $310? What I was really interested in was whether it was like a regular IPO in terms of everything being “sold” at the same time or if each insider selling just has stock and decides their asking price/market price and sells it when they want and if there is a lock up period for the rest of the insiders do they still have the stock sitting their just unable to sell until X date?

Oh well, probably just watching this one anyway. Fidelity has a couple IPOs pricing tonight that I’ll try to get in on and another couple coming soon.

 
beef said:
Is the big difference between Coinbase and SoFi, or other crypto buying platforms the integrations it has with wallets and being able to use crypto as currency and not just an asset?

Just trying to rationalize how one can be valued around $2B and the other $60B.
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Coinbase is exclusive to crypto currency.  It's second in the world to Binance and largest in the US.  I have a Coinbase account just like I have a Fidelity account, just for crypto.  It does have wallets, but, you have to be verified so if you wanted move money around without it being subject to the SEC you'd have to have another wallet anyway.  It's primarily just the largest Fidelity type investment platform for crypto.  

 
I just doubled the volume for GCV today.  You are welcome.

It was kinda cool to see in realtime actually, GCV is not a high volume traded stock.

 
beef said:
Is the big difference between Coinbase and SoFi, or other crypto buying platforms the integrations it has with wallets and being able to use crypto as currency and not just an asset?

Just trying to rationalize how one can be valued around $2B and the other $60B.
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SoFi uses Coinbase to conduct crypto transactions and charges a markup. Basically resells their service. 

 
Steeler said:
@hooter311

What are your thoughts on the bit coin halving that occurred in 2020?  Some of these predictions are pretty wild but not unreasonable if the same price action occurs this time:

https://twitter.com/DocumentingBTC/status/1381575526821863424
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In theory, it should work, but when you consider that it's already a trillion dollar asset there is only room for another 8x or so over the next 5 years, imo.  15x I would consider as the absolute moon from where we are now and that's with btc kicking gold to the curb.

Will be interesting to see how this energy war plays out as critics have been pushing the narrative of it being one of the more destructive forces of the world economy on nature.  I don't have any sort of grasp on the global impact of bitcoin mining.

 
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