The Robinhood effect: Retail traders drove Snowflake and Unity Software's IPO surges
21 September 2020
The story of last week's Snowflake and Unity Software IPOs had little to do with data warehousing or 3D game development, and lots to do with dizzying "pops" after pricing.
What happened: The Robinhood effect.
By the numbers: Unity priced its IPO at $52 per share and began trading Friday at $75 per share. It later pulled back a bit to close at $68.35, but that was still up more than 31%.
- Snowflake priced at $120 per share and began trading Wednesday at a whopping $245 per share. It closed Friday trading at $240.
Between the lines: People close to both IPOs say that the increases were driven almost exclusively by retail traders, which represented single-digit percentages of the floats.
- “The institutions didn’t sell,” says a source involved with Snowflake. “What you saw was a Robinhood feedback loop.”
- Unity implemented an online bidding system, designed by the company and coded/implemented by Goldman Sachs, whereby all potential institutional investors had to enter IPO requests at different ranges with nobody submitting market orders.
- For example, Primack Investors LP said it would buy 200k shares at $52, but only 100k shares at $55. This gave Unity much more demand curve data, but still couldn’t account for retail investors (or for its own employees, who had lighter lockups than is typical).
To be sure, underwriters are tasked with helping to anticipate retail demand — and just because institutions aren’t selling doesn’t mean they aren’t lending. But it’s not correct to claim, for example, that Snowflake could have priced the IPO at $245 and that the delta was lost working capital.
The bottom line: Every IPO issuer wants pricing efficiency, with Unity taking it more seriously than most. But there's little they can do once their shares float into irrational exuberance.
Transcripts show George Floyd told police "I can't breathe" over 20 times
Section2Newly released transcripts of bodycam footage from the Minneapolis Police Department show that George Floyd told officers he could not breathe more than 20 times in the moments leading up to his death.
Why it matters: Floyd's killing sparked a national wave of Black Lives Matter protests and an ongoing reckoning over systemic racism in the United States. The transcripts "offer one the most thorough and dramatic accounts" before Floyd's death, The New York Times writes.
The state of play: The transcripts were released as former officer Thomas Lane seeks to have the charges that he aided in Floyd's death thrown out in court, per the Times. He is one of four officers who have been charged.
- The filings also include a 60-page transcript of an interview with Lane. He said he "felt maybe that something was going on" when asked if he believed that Floyd was having a medical emergency at the time.
What the transcripts say:
- Floyd told the officers he was claustrophobic as they tried to get him into the squad car.
- The transcripts also show Floyd saying, "Momma, I love you. Tell my kids I love them. I'm dead."
- Former officer Derek Chauvin, who had his knee on Floyd's neck for over eight minutes, told Floyd, "Then stop talking, stop yelling, it takes a heck of a lot of oxygen to talk."
Read the transcripts via DocumentCloud.