Google IPO

January 6, 2004 6:15 AM

What is the best way to get in on Google's IPO? I know nothing about investing, other than having a 401k. Can the average Joe get in on it without paying a broker or something like that?
posted by quibx to Computers & Internet (7 answers total)

Knowing nothing about investing is a great reason to stay away from IPOs, even from companies you think will increase in value over time. Consider buying when the price settles down, because it's extremely difficult for individual investors to ride that early-IPO wave, and institutional investors count on suckers like you to get in there after they do to heat up the market for them.
posted by majick at 6:29 AM on January 6, 2004

Unless Google has some kind of unorthodox IPO (which is doubtful), you need to have a relationship with Google or some kind of financial institution to get in on it. IANAB, but if you really "know nothing" about investing, stick with a fund. The cachet of owning individual stocks is just that, nothing more.
posted by mkultra at 6:29 AM on January 6, 2004

There has been talk that Google will go the "dutch auction" route with their IPO, which theoretically would give the little guy better access to shares, while at the same time erasing the huge IPO runup that quibx is no doubt dreaming of, which results from shares deliberately mispriced on the low side to route quick first-day profits from Google's coffers to those of the investment bankers' preferred clients.

Theoretically, that's how it would work. However, in capitalism, never bet against the ability of "preferred clients" to screw the small investor somehow.
posted by luser at 6:33 AM on January 6, 2004

I echo the sentiment of staying away from Google (even buying it on the open market on the first day, or buying any other individual stocks for that matter) until you learrn a bit more about the market. I'm doing this now - investing in a few individual stocks and reading a lot before I get too involved in individual stocks.

Even though Google seems like a sure thing, I'm sure this stock is going to see it's ups and downs - notice today's news that Yahoo is dropping Google as its search engine, for example. The market is a lot tougher on companies than it was in 1999.
posted by drobot at 7:01 AM on January 6, 2004

Response by poster: Thanks all for your suggestions. This looks way over my head, and I need to go do some homework..
posted by quibx at 7:41 AM on January 6, 2004

Building on the float issue (above) note that Google will isue a huge amount of shares to its employees, executives, family relatives etc.

These shares, by law, can't be sold for a requisite amount of time. I believe its 18 mos from 1st day of issue.

My point is, the amount of shares outstanding will actually be very low until the 18 mos mark, when a flood of shares will hit the market all at once. This has a well known and demonstrable effect on share price.

IPOs are indeed tricky. Not the place to cut your teeth on equity investment.
posted by Fupped Duck at 1:14 PM on January 6, 2004

Just to clarify -- the lockout period for insiders (employees, directors, etc.) is typically 180 days post IPO, not 18 months.
posted by msippey at 11:49 PM on January 19, 2004