Fast forward three years to Square, the mobile payments and merchants service provider run by the co-founder of Twitter, Jack Dorsey, which priced its IPO on November 19. Priced below the $11 to $13 range at $9, the shares immediately leapt to $14.78 and closed at $13.07. The IPO was underwritten by Morgan Stanley, JPMorgan and Goldman Sachs.
In between these two deals the same three underwriters underwrote the Twitter IPO, where shares jumped 73% from their IPO price of $26 to open at $45.10.
Reading investor demand and translating this into the best price for the client is fundamental to the IPO underwriter’s job. A first day pop of 10% to 15% is deemed optimal. Past performance is obviously not an indication of future fee business in tech IPOs.