GROUPON’S UNDERWRITERS: THERE’S REALLY NO REASON TO BUY THE STOCK WE JUST SOLD YOU
You mean the bankers were just in it for the money?:
Groupon’s bankers reaped more than $40 million in fees in November, when the daily deals giant went public at $20 a share. Now, Wall Street’s affections have cooled.
Six of the company’s underwriters, which had to wait until Wednesday to initiate coverage, stamped Groupon’s stock with neutral or hold ratings. Five issued bullish, or buy, calls. Their price targets ranged from $21 to $29. The lukewarm reception dragged on Groupon’s shares, as the stock tumbled 3.3 percent to close Wednesday at $22.55. [Emph. added]
Six “holds”? . . .. . Once upon a time, not so long ago, the tacit agreement was that the underwriter would pretend it was really, really enthusiastic about the company it was bringing public and, in return, the investor would pretend that it wouldn’t flip its allocation the day after the pricing. Everybody came out a winner! But this new arrangement seems so commercial . . . One almost pines for those romantic days of good, old-fashioned sell-side research whoring. . . .