Problem is - bankers usually price it low expecting a decent pop to keep their big clients that get IPO shares happy. So when one of the hottest companies out there doesn't pop and with Groupon well below their highs - not looking good.
I would agree with that if these were normal times. But the world is in desaster mode, there's talk of depression, and we have a mini dot com bust going on right now. I think, pricing an IPO for a pop in this environment means leaving a lot of money on the table.
The scam works something like this: The banks who back the IPO get the right to sell themselves and large institutional investors (who treat the privilege like being handed a giant bag of money) shares before they hit the market. They buy these reserved shares, wait for the "pop up" in price as everyone scrambles to get in on the IPO, and sell at a considerable low risk profit.
To put it nicely, Zynga or anyone else in their shoes, doesn't really decide how much money is "left on the table." The adults are in the room, and they are making the decisions.
Zynga didn't really "pop" like it was set up to. The banks who had rigged the horse race to be a surefire bet, watched their horse break a leg around the first turn. Sure they still made some money, but nobody involved in inking the deal is looking forward to going into work on Monday.
Or maybe this story has simply ceased to be true because everybody knows it and investment bankers have come under intense criticism for it. Google held a dutch auction and still apparently left quite a lot of money on the table.
