is it true an over valued IPO can ruin an otherwise good company

Ruin is being overdramatic.

But yeah, it's better to undervalue an IPO for the company. For the bank, they're fucked both ways, and need to try to be as accurate as possible.

A company's stock price has very little effect on its performance or prospects. In reality, it really only affects two things:

1) The ability to raise additional capital by issuing additional shares post-IPO. While potentially important in some cases, its not always needed and there are many other ways to raise capital.

2) It affects the company's ability to incentivize employees with stock grants and options.

Maybe it also affects perception in the market, and employee morale, but those are hard if not impossible to quantify.

>>1625817

Why would a bank not want to overvalue within an acceptable margin?

>>1625844
>Why would a bank not want to overvalue within an acceptable margin?
Because the bank's role is as underwriter. That means they guarantee the founders a certain price, in exchange for a large fee. It's like insurance for the founders that the IPO will make them money.

When the underwriter screws up the pricing, it can be very expensive for them.

>>1625852

I see, thanks

facebook was overvalued at $38/share and it tanked to $18 so people shorting it made 2x money. since they bought the dip they let it grow to $118 and made 5x money. overvalue, short, ride the dip = profit.

>>1625924
>is it true an over valued IPO can ruin an otherwise good company and that it's always better to undervalue

Almost nobody can predict that perfectly. Stop wasting our time with your sensationalism.