An IPO

[docbaddass]

he has a top hat. and thank you very much for you for the vids dude

[TheFambrough]

Im looking for IPO'S that I can offer low Credit Card Rates and ACH. We own our platform. M2 World Widellc.com 727-498-0007

[toplad007]

Amazing video. This part had me really laughing where you said 'Maybe the angel investor had an expensive divorce settlement!' superb

[UneJizz]

LOOOOLLLLLL the top hat dude... i am thoroughly enjoying this series sal, keep it up

[Mattprole]

This has been amazing so far. I feel like I've gone through a journey, and I'm anxious too see how my sock company turns out!! Sal, you are like some sort of story telling God!

[vickiormindyb]

I know someone who worked for New York Stock Exchange. He doesn't anymore, but he did that before he got a job at the World Trade Center.

But he won't tell me what he did at ANY of these jobs. When he worked at One World Trade Center (the N. Tower, which he's NEVER called it) he was doing something w/ hedge funds.

[gitgit42]

it's amazing! this guy is basically doing what teachers used to do on the black/white boards and OHPs in classrooms... and after 20 years of fancy pant powerpoint styled presentations and what not.. people has finally come to realize that this works the best for learning! omG we've finally come round 360. thank God!

[konjyoman]

@gitgit42 I love those, can't find them anywhere!

[MrPyleStyle]

"Well maybe he's happy....right, cause' he got $100 dollars. He's got a TopHat..." haha, too funny.

[litnight]

"maybe he's happy...he has a top hat" LMAO!!  funniest line ever!!!

[discovarp]

what happens to private equity holders share when the company first goes public?

can they go and sell the shares? in ur example there are 10m shares in market( that can be traded on public exchanges) and there are 14m share( i.e 10m ipo shares and 4m private equity holders in company).

[SeekMeIn]

Excellent

[BigPurple121]

Sal. I owe you a beer. Next time I'm in Berkeley.

[kernel2006]

It was the top hat that made this video

[hctivas]

Share prices are still important after IPO because people who have been holding shares of the company before IPO often keep them after IPO hoping that they can sell them at a higher price later. Also, as you have pointed out, a higher share price makes it easier to raise capital in from the equity market.

[pali07ab]

GJ..! really enjoyed your videos

[praneix2]

Sal, could you make a video on dilution and the difference between diluted and basic Earnings per share?

[dieonyourfeetDEC16]

I did a business minor so I knew the basics of an IPO. My question has always been, after receiving the cash from an IPO, why do companies care so much about the stock price in the secondary market, it seems most companies and investors are obsessed with the price of the stock. It seems that this price can't affect the profitability of the company. Is it to have more ability to raise capital later? issuing more shares later? is this common practice, issuing more and more shares?

[dieonyourfeetDEC16]

Like for example financial commentators get so worried when the price of a stock goes down in price. But in reality, in that moment, this does not affect the company. Either the company is profitable or not, and if is profitable then it should be bringing in a lot of cash from operations and paying dividends to investors. Why does the price on a given day matter so much? Isn't the longterm health of the company what matters? is it making money or not??!

[MotoMotoQUartaROcks]

I guess that some persons are just trying to make profit in a really short term, by buying shares today at a given price, and sell them later in the day at a bigger price. Therefore it doesn't really matter for them if the company works or not.

However when you do a long time investment and are looking forward for the company to succeed, pay dividend, and one day maybe being bought from another company (giving you a big jackpot)), I agree with u, why the daily price matters so much?

[pjblabla]

one reason could be hostile takeovers - as their value is assessed based on the current trading price of the target company's share

price of additional shares issued is calculated from the average price of the closing price of the share over the last month or so

[iamacyborg]

@dieonyourfeetDEC16 I think part of it at least is that the company owners own a lot of stock in the company (in this example, Sal owns 200,000 shares).

Maybe some of it also has to do with their balance sheet - like the assets of the company are valued based on their share price, so if their share prices falls it means their non-monetary assets are worth a lot less relative to their outstanding liabilities (debt); which may make them go bankrupt.

[back2root]

@dieonyourfeetDEC16

The company is worth more when the price on secondary market raises...

[akamad]

@dieonyourfeetDEC16

I think it has more to do with the fact that you have to keep the shareholders happy. The shareholders certainly don't want to to see stock prices drop. And the shareholders get a say in how the company runs (ie, they can kick out the CEO if the share price drops).

[iNinjaNotes]

@dieonyourfeetDEC16 Good question. After a company performs an IPO, it is true that they receive the cash and they offer shares in return.  After the IPO the secondary market may seem like it doesn't affect the company but it does. For one, the company has management and directors that are granted stock options that provide an incentive to be obsessed with getting their ticker as high as possible. That way they may exercise them for secondary income on top of their salaries.

[iNinjaNotes]

@dieonyourfeetDEC16 Secondly, you were right when about additional offerings.  If the company is not a cash cow, it might have to place additional private placements. Which are offering shares usually to wealthy clients at different brokerages, but many retail investors may also subscribe. If they don't care about their share price then nobody will want to subscribe to their placement. No interest = No cash.

[iNinjaNotes]

@dieonyourfeetDEC16 Also, a worse share price means when they want cash, they'll have to issue a LOT more shares. More shares = more dilution which means a smaller EPS share. This means less profit per owner of the company. Which is a big deal when your operating publicly.

[iNinjaNotes]

@dieonyourfeetDEC16 Finally, it is very common for additional private placements because unless the company is operating cash flow positive, they'll need to either A) refinance (debt or equity/share offerings) or B) Sell assets. Private placements are common for companies that are trying to grow. For example, many gold companies decide to initiate PP's to continue exploration or to finance a mining facility. However the latter is usually a hybrid of debt/equity. Hope that clears it up!

[serbenmar]

Sorry I didn't understand the 7% fee for the investment bank.

This will make that the company raise 186M + 80M and the shares in the market will be 14M and with a price of 20 USD, then 14M USD will be missing because of the 7% of the investment bank.

Would this be taken in consideration before setting the price on the market and you jump this to don't get much on details or Is it that I just didn't get it?

Thx 4 ur vids

[Shazaaming]

I thought it was really straightforward, informative, and fundamentally awesome. I've heard all these terms thrown around before. Didn't understand the framework until today. The casual tone helps a lot, too.

Thanks again.

[sassy2021]

=/....

[Prolocater]

thanks for explaining

[MpLMx]

The subject is important in terms of financial literacy but it is awful in terms of its presentation...

Please pay more attention to the presentation... I can't understand what you write.

[sidyadav]

Give Sal a break. Everything here is FREE. (Is that in your vocabulary or should Sal make a video for it?)

We do not PAY for it. He does not GET anything from it. He doesn't need to do anything -- ANYTHING for us. Infact, if you can advise him to pay more attention to the presentation, why won't you start a YouTube account and make educational videos yourself? Oh wait, that's because you don't know anything.

And I actually thought the presentation was great. Keep up the great work Sal.

[MpLMx]

Don't be stupid my friend; I DIDN'T talk about money (Did I?); I thank Sal for a free resource but the problem is simple, unfortunately, I couldn't understand what we wrote... as simple as that.

Let's do something: if you "know" more than me, Why don't you start a channel dedicated to educate yourself to UNDERSTAND what you read before making STUPID assumptions?

Read and think before you talk... you'll suffer less if you do it rather than making a fool of yourself.

[sidyadav]

Actually, I never said you talked about money. If you could "read", you would infer that my comment was referring to the fact that it is idiotic to criticize a FREE resource which someone puts up from the good of their heart.

Case-in-point: you're someone named Sal and you have spent 100s of hours making free educational videos for people. An idiotic YouTube commenter says your presentation is "awful". Who is the a-hole here?

If you're going to say it, at least do it in a kind way.

[MpLMx]

You are right... well, sort of...

Again... I didn't talk about the resource itself; I talked about using a hand written style to explain an subject that it's particularly IMPORTANT for financial literacy purposes.

Case-in-point: I'm not against financial literacy; Sal covers the subject really good although he could have used a PPT presentation?

Who's the "asshole" here? Not me (that's for sure)... besides, he doesn't need "bodyguards", Does he?

[sidyadav]

News flash: Sal has 8,000 subscribers, 224,000 channel views, and millions of vews in aggregate on his videos. All 768 of them have the same "black-board-style-hand-writte­n" presentation to them, and millions of people have learned millions of valuable things from them successfully that way.

Did you really expect Sal to change because of your one comment?

I like the format because it's so spontaneous -- Sal can show anything at anytime. A prepared PPT would make people want to kill themselves.

[wmacorlando]

wasn't Sal on CNN because of his horrible presentation skills?

[sidyadav]

Yes, and he's even gained thousands of fans around the world who watch his videos and learn from him because of his horrible presentation skills. They could be watching the much more entertaining "here's me getting hit in the balls" videos which have great presentation, but they choose to watch his. I wonder why. Oh wait. That's because maybe to most people, his presentation skills aren't horrible after all? Is that a possibility? Don't understand? Maybe Sal will make a video on it. :-)