Insiders get rich on IPOs, masses lose

[steve2470]

http://americasmarkets.usatoday.com/2014/05/09/insiders-get-rich-on-ipos-masses-lose/

Regular individual investors are taking the biggest hit from the crashing values of companies that have recently sold shares to the public — while the privileged investors are largely spared.

There have been 41 initial public offerings over the past 12 months, including Internet stock Twitter, restaurant chain Noodles and natural foods store Sprouts Farmers Market, where privileged investors who bought shares at the so-called offering price are sitting on big gains, even while most individual investors are suffering massive losses.

An IPO’s offering price is the price initial investors, usually wealthy clients of brokerages and large institutions and investors, pay for shares of IPOs the day before the trading starts.

Twitter is perhaps the most high-profile example. Investors that got in at the IPO price back in November, $26, are sitting on a 23% gain. Those that jumped in and paid the first-day closing price of $44.90, though, are down nearly 29%.

[Trillo]

1. Thanks for spreading the word

this has been going on "forever."

Okay, I exaggerated a little. It's basically gambling, with poor odds unless you are one of the initial investors.