Henry Blodget thinks so:
ZipCar’s stock is trading at about $28 a share this morning. Goldman and JP Morgan sold the same stock to their best institutional clients at $18 a share last night. The value of ZipCar-the-company, it seems safe to say, has not appreciated by 50% in the past 12 hours. And that means that, on its underwriters’ advice, ZipCar sold its stock way too cheaply. It also means that the institutional investors who bought ZipCar’s stock last night are high-fiving each other this morning, celebrating their instantaneous 50% gain. (Lots of them are probably also dumping some stock).
By underpricing the stock, Goldman and JP Morgan gave their best institutional clients a gift of at least $50 million this morning. And that money came right out of ZipCar’s pockets and the pockets of the Zipcar shareholders who sold on the deal.
As Blodget goes on to explain, we’d expect something like a 10-15% IPO discount, to give big institutional investors an incentive to take a chance on an untested young enterprise. But he senses that this undervaluation wasn’t just an honest mistake.
As a ZipCar enthusiast — I’m a believer in sharing platforms, particularly those that facilitate density — I found this galling. It’s also devilishly hard to prove.