A company called OpenTable went public this week, and its share price went up 59%,
Online restaurant-reservations system OpenTable Inc. dished out the best IPO performance since late 2007, delivering a 59% gain in its trading debut.
Shares of the San Francisco company on Thursday closed at $31.89 apiece on the Nasdaq Stock Market, well above its initial offering price of $20.
Investors would have to go back to December 2007 to find a better first-day close, from Orion Energy Systems Inc., which rose 65% during its debut.
This first-day rise in the price is presented by the business media as a good thing, worded as “best performance” and a good first-day close, demonstrating again how the business media favors corruption over competence.
You see, what this first-day rise in price tells us is that the underwriters grossly underpriced the stock, which the business media did not explain. The company should have gone public for $30 a share, which the market demonstrated, rather than the $20 a share that the underwriting companies allowed insiders to buy at on the opening. The way this racket works is that insiders get the special $20 price and can sell at the $30-35 price later in the day. The company, however, only received the $20 per share it offered, cheated out of the $30 it clearly should have received. Others got rich at their expense.