Google stockowner for a day: a memoir
If only the rest of my investments worked out this way.
One week ago, I submitted a bid for Google Inc. stock that overestimated the eventual auction price of the computer search company's initial public offering by nearly 30 percent. But I sold my shares shortly after Google stock began trading yesterday and still walked away with a nice profit, at least measured by percentages.
What a market!
I jumped into the Google auction IPO process two weeks ago, investing the newspaper's money, for the purpose of writing about that experience. I assumed the role of the small investor, opening a very modest brokerage account after registering with Google and later bidding for the minimum five shares.
I also assumed the attitude of an upbeat technology investor because, in truth, Google stock was a bad match with my value-oriented instincts. After processing Google's financial reports several different ways, I submitted a bid for $110 per share.
By late Wednesday, I got the good news via e-mail. Google told me my bid had been accepted. Better still, bad publicity and a series of foolish corporate missteps had helped knock down the price all winning bidders would pay to $85 per share. Talk about being saved from yourself.
One catch: Google would not allot me all the shares I had bid on. My new Ameritrade account showed I owned four shares, not five.
Google stock opened for trading with a boom late yesterday morning. The first few transactions appeared to push the price fleetingly to between $135 and $140. I scrambled to pull up my brokerage account on a computer screen.
The initial reports turned out to be wrong, a Nasdaq glitch. Google stock officially opened for trading five minutes before noon at $100.01.
But demand appeared to be genuinely strong and Google's price held its ground, give or take a few dollars.
For me, it was time to get out. I placed a market order online and became a former Google stockholder within moments. I received $98.70 for each of my shares and was pleased to get it.
True, I could have made more. Google shares spent most of the day trading above $100 and closed at $100.34. On the other hand, I made a profit of $54.79 on my investment of $340, a gain of about 16 percent.
Like me, Google executives stumbled through mistakes and miscalculations but still came through the IPO process with reasons to be pleased.
Despite all the cynicism, Google made good on its populist investment theme. Individual investors of all sizes who stuck with the bidding and offered $85 or more got most of the stock they sought. Big-money investors were offered the same terms available to me and my five-share bid, certainly not business as usual when it comes to IPOs.
Successful bidders could cash out for an immediate profit, as I did, or hold on knowing they had bought a profitable, growing company at a reasonable price. Though I cringed while bidding $110, the eventual IPO price fits much better into conventional portfolios.
Hopefully, Google's founding executives grew up a little bit during the IPO experience. They had appeared to be much too impressed with themselves and paid the price of looking foolish in a very public setting. The Playboy fiasco alone will be remembered for years.
There are other reasons for investors to remain cautious about Google. Insiders will become eligible to sell millions of shares into the market soon. The company's two classes of stock, which give public shareholders little voting power for their money, are not a hallmark of investor democracy.
As for my one-day stock profit, whatever remains after a few expenses will go to charity. Hopefully, every little bit really does help.
Steven Syre can be reached at syre@globe.com.
