Google IPO Auction as Ebay

Google IPO is here! Is there anything else in the tech world to discuss today?

One thing I've been wondering about in terms of the auction process, is that its effect may just be a way of differently allocating the inevitable irrationality. There's this gem in Google's SEC filing:

The auction process for our initial public offering may result in a phenomenon known as the "winner's curse." At the conclusion of the auction, bidders that receive allocations of shares in this offering (successful bidders) may infer that there is little incremental demand for our shares above or equal to the initial public offering price. As a result, successful bidders may conclude that they paid too much for our shares and could seek to immediately sell their shares to limit their losses should our stock price decline. In this situation, other investors that did not submit successful bids may wait for this selling to be completed, resulting in reduced demand for our Class A common stock in the public market and a significant decline in our stock price. Therefore, we caution investors that submitting successful bids and receiving allocations may be followed by a significant decline in the value of their investment in our Class A common stock shortly after our offering.

Remember what happens to items which get bid-up on Ebay during auction fever ...

Seth Finkelstein's Infothought blog (Wikipedia, Google, censorware, and an inside view of net-politics) - Syndicate site (subscribe, RSS)