If the true value of an IPO is for a company to raise money to invest, and it can be mutually beneficial to the company and the investors, then market price is a driver of intrinsic value.
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Intrinsic value is actually not a real thing in the sense that its own drivers are reflective of extrinsic economic and market conditions. Intrinsic value is ephemeral and only kind of exists.
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Replying to @LAForeverHall
A lot of IPOs even before the recent VC bubble were bailouts e.g. the birth of the REIT industry — got caught on the wrong side of spreads and went public to avoid BK
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Replying to @rhunterh
Then value was transferred from one shareholder group to another and the IPOs still influenced intrinsic value per share?
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Replying to @LAForeverHall
True, I don’t know though, so much to unpack moving private to public. NAV premium/discount, liquidity and access to cheaper (retail) capital. Definitely an impact on IV but also probably short-lived.
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Replying to @rhunterh @LAForeverHall
Let me put it this way, your house is worth more on the market than off, but the value of living there is unchanged and maybe even lower
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Replying to @rhunterh
I think there's a misunderstanding here because I said the word IPO, which is my fault. It could be any equity raise. What I'm saying is that intrinsic value can not exist because intrinsic value can be altered by market value and other extrinsic factors.
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Replying to @LAForeverHall
Now we’re talking some Modigliani–Miller theorem
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Replying to @rhunterh
No that’s also incorrect. I’ll write a longer post about it soon.
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Or at least, if not incorrect, not what I mean.
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