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It depends on who you ask. If you listen to the media, it was a failure. A successful initial public offering has to feel like July 4th fireworks. The stock opens 30% above the set IPO price and then finishes the day up 100%. That’s a newsworthy IPO that (according to the financial commentariat) deserves the uncorking of champagne.

In that kind of IPO, the underwriters, the brokerage firm(s) that brought the deal to the market, have lots to celebrate, too. They’ve used this IPO to butter up their best clients – the ones that bring them the most business.

See, the IPO market is not designed to actually benefit the shareholders of the company. Where the stock trades at the opening has little to do with what the company is worth, and has everything to do with supply (insiders selling shares) and demand (mutual fund and hedge fund interest in the stock).

That’s it.

The underwriters’ job is to assess interest on both sides and set a price near equilibrium.