Comment by darth_avocado
14 hours ago
If underwriters think it’s worth $1.7T with a $16B revenue (not profit), they’re doing the same thing as the credit agencies did in 2008 by giving underwater mortgage backed securities a AAA rating.
14 hours ago
If underwriters think it’s worth $1.7T with a $16B revenue (not profit), they’re doing the same thing as the credit agencies did in 2008 by giving underwater mortgage backed securities a AAA rating.
Do you have any evidence or analysis to back that up? How are those similar?
It's not the same at all. Do you know how an IPO roadshow works at all or are you just spouting bullshit?
If roadshows guaranteed accurate valuations, pets.com wouldn’t liquidate within a year of IPO.
Again, not debating that SpaceX isn’t a legit company or that it’s profitable. But underwriters agreeing with high valuations to stocks that collapse once they go public isn’t unheard of.
Edit: and I will concede that I should’ve phrased my initial thoughts better. Credit rating agencies and underwriters do very separate things, just like IPOs and MBS are two very separate things.
You said: "underwriters ... doing the same thing as the credit agencies did in 2008 by giving underwater mortgage backed securities a AAA rating"
That isn't what is happening at all.
In an IPO the underwriters and the company collaborate to set the price based on approximate demand and what they want the quality of the holders to look like.
In the roadshow, the company is very constrained as to what they can say or disclose outside of the scope of the S-1. They can't include MNPI, forward looking financial projections, etc. Underwriters are also prohibited from sharing MNPI, or publishing marketing disguised as research.
So I guess if you're saying the SpaceX S-1 is completely full of shit and there's hidden risk in it, than it could be similar to 2008, but in this case nobody is manufacturing a rating, and those material misrepresentations would constitute securities fraud. Investment banks and ratings agencies aren't the same thing at all, and the buyers of marginally profitable IPO stocks are (hopefully) different than those of AAA MBS.
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