When DoorDash and Airbnb went public last week, investors concentrated around stocks, bringing them to 86% and 112%, respectively. But Verishop CEO Imran Khan said the public debuts showed extreme ineptitude on the part of his investment bankers.
Khan led Snap through his IPO as a strategy director, and previously worked in investment banking at JPMorgan and Credit Suisse, where he helped make Alibaba public.
“The latest IPOs, with the way they work, seem like an epic level of incompetence on the part of bankers,” Khan said Tuesday on CNBC’s “Squawk Alley”.
“Clearly someone wasn’t focusing on what’s going on in the customer mindset,” he said. “When the market is very busy, bankers often focus a lot on chasing deals and managing customers, rather than doing their job. As a result, people keep that conversation going and a lot of people lose confidence in the exit. the stock market process “.
Public offerings rekindled a debate around traditional IPOs, with critics looking at the money left on the table. Airbnb listed the shares at $ 68 each for $ 3.5 billion, while DoorDash listed its $ 102-per-share IPO and grossed $ 3.377 billion.
Khan said that while he doesn’t believe the global IPO system is broken, the people who work there could do better. It’s a similar argument made last week by CNBC’s Jim Cramer, who criticized investment banks for not properly considering the “new cohort” of younger investors, as they had an IPO price.
“I don’t mean that the market is broken, but the process of how we are making these deals is definitely broken,” he said, adding that it was a “shameful” job that the financial companies working the OPCs were doing.
In an interview with Squawk Box on Tuesday, Goldman Sachs President and CEO David Solomon defended the IPO pricing process, saying the investment bank has developed a much more transparent system. “which allows companies to obtain real – time information on market demand.
“I think one of the things that is not well understood is that the companies themselves choose their investors in the context of this. They have much better transparency than they would have had five or ten years ago about the decisions they want to make. around that, “Solomon said. “But despite making those decisions, if people go into the aftermarket and buy the shares and keep raising the share price, that’s very, very hard to control and very hard to think about.”
– Kevin Stankiewicz of CNBC contributed to this report.
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