29th July 2010
The FT Alphaville bloggers have been merciless on the Ocado share pricing shambles so far. So have the forum posters on Shareprice, although a hardy few are defending the fort vigorously on the grounds of service quality.
But the very popular Robbie Burns, aka The Naked Trader, had the issue as the Stinker IPO of the Year, with a somewhat cheeky valuation of 80p.
There was a time, and a very good time it was too, when you could generally reckon on a newly-listed share to give you good value for money.
After all, it was only fair, wasn't it? You were taking a gamble on a share that hadn't yet proved itself in the stock market, so you deserved to get it at a discount price that would leave you in profit when the price quickly floated upward to its rightful level?
Well, that's certainly the perception that a generation of privatisation punters have grown up with. But, as the last month's troubled Initial Public Offering (IPO) of Ocado has shown, it ain't necessarily so.
Ocado is, of course, the service that delivers your Waitrose orders to your door. Originally launched in 2000 by three former Goldman Sachs bankers, the company finally launched its share issue on the London Stock Exchange on 21st July with a sharply-reduced flotation price of 180p – and even this last-minute chop-down (from an optimistic initial valuation of 200p-275p) wasn't low enough.
The price promptly dropped to 159p before scrabbling back to 166p six days later. Disaster!
As for The Naked Trader's 80 valuation, will it ever sink that low? Not a chance…..