Background
Prices are not made by a single person, but rather are the byproduct of many people competing for an edge. When individual hunches or analyses are combined into a "market," they create tremendous value in solving the complicated equation of what an IPO is worth. This price discovery process is managed by the underwriters and is known as "book-building." Book-building is good for collecting pricing information but is not designed to provide real-time, pre-IPO feedback analysis to investors — which would assist all parties in creating more efficient and satisfying pricing outcomes.
Recent IPO pricing innovations such as the "dutch auction" have benefits in the form of maximizing proceeds and fairness of allocation, but still do not provide the necessary pre-IPO feedback to investors. The dutch auction's methodology forces even more accountability for valuation onto investors — there is risk of the "winner's curse," where large numbers of uninformed investors place unduly high winning bids without any pre-IPO feedback.
The Practice Auction Simulator
Our Auction Simulation service allows anonymous customer testing of pricing viewpoints or bidding strategies against a community of other customers prior to the actual IPO. Customers buy tokens to reflect simulation of various mock bid sizes. If a research report is purchased, Well Auctioned will include a starter set of tokens. Multiple mock bids and bid prices can be accommodated. Customers receive results after the auction simulation closes. The results provide knowledge to the customer of where their mock bid is versus the rest of the community.
The closest customers to the "clearing price" determined by the Auction Simulation will receive Well Auctioned's Premium Content, a detailed analysis of the mock auction — which provides vital keys to unlock the market's view on the IPO.
Auction Simulations will commence after the company has filed an amended S-1 (or equivalent) filing with the SEC, which is usually 30 to 45 days after the initial filing. Depending on demand, Well Auctioned will conduct at least two auction simulations prior to pricing of the actual IPO, allowing customers to make adjustments to their strategies and to accommodate stock market and comparable company price movements.
Participation in the Auction Simulation is entirely voluntary and does not convey any rights or privileges with regard to the actual IPO. Auction Simulation results may vary from Actual IPO Pricing. Well Auctioned does not accept responsibility for outcomes an investor may have as a result of participating in or purchasing shares in the Actual IPO.
We hope you enjoy our auction simulation!