Wednesday, November 06, 2013

Oversubscription and the wait for Twitter IPO allocation

I'm still waiting on the Twitter IPO. I imagine what the underwriters are doing right now are two things: 1) confirming what firms and funds still want in on the deal at $26 and whether they may want to reduce their allocations at that premium price, and 2) working through the subscriber list in priority order since it is heavily oversubscribed and firms and funds need to have their indicated interest reduced in some semi-rational manner.
 
Until that process completes – possibly taking even a few hours – brokers can't deal with us retail customers. Once a broker has their final allocation for the whole firm, they can then begin working through the same process for each of us retail investors. That would be when I would get my call.
 
When I was in a local Fidelity office last week, one of the guys said that the process for Facebook lasted into the next morning. Not an appealing prospect, but maybe it's the price you have to pay to be in this kind of game.

-- Jack Krupansky

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