Gurley cites IPO underpricing rising from $2B in 2016 to $30B last year, showing the problem is worsening.
“under first day under pricing in 2,016, 2,000,000,000. 17, 4,000,000,000. 18, 7,000,000,000. 19, 9,000,000,000. Last year, 30,000,000,000. So the problem's getting ginormously worse.”
Gurley cites Kuaishou's $5B IPO with $9B underpricing as extreme example of the problem.
“And then yesterday, on the Hong Kong exchange, Kuaishou, $5,000,000,000 deal, $9,000,000,000 underpricing on one deal.”
Gurley argues IPO allocations transferred $4.5 billion in wealth from Snowflake to allocation recipients overnight.
“And so the day after the IPO, the people that were allocated the stock the night before have 4,500,000,000 in wealth they didn't have before. And that money didn't just come out of nowhere.”
Gurley quantifies Silicon Valley IPO underpricing at $171 billion over thirty-nine years based on day-one price jumps.
“So the first slide is about underpricing, and this is solely looking at the difference between the price that the stocks handed out to the night before and the close the next day.”
Gurley states Silicon Valley lost $171 billion to IPO underpricing over 39 years, $6 billion year-to-date.
“over thirty nine years, that's been a 171,000,000,000 for Silicon Valley companies, and it's been increasing lately. Just year to date, we're at 6,000,000,000 in underpricing.”