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Illustration: Sarah Grillo/Axios

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.

Go deeper

Dion Rabouin, author of Markets
Sep 24, 2020 - Economy & Business

Energy stock jumps 4,000% after announcing electric vehicle unit

Data: FactSet; Chart: Axios Visuals

Shares of little-known SPI Energy Co. jumped by as much as 4,000% on Wednesday, rising from around $1 to as high as $46.67.

What happened: SPI announced it was launching a unit to design and develop electric vehicles and charging solutions called EdisonFuture — a nod to electric vehicle companies Nikola and Tesla, which are both named after Nikola Tesla, a rival of Thomas Edison.

Updated 47 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Large coronavirus outbreaks leading to high death rates — Coronavirus cases are at an all-time high ahead of Election Day.
  2. Politics: Top HHS spokesperson pitched coronavirus ad campaign as "helping the president" — Space Force's No. 2 general tests positive for coronavirus.
  3. World: Taiwan reaches a record 200 days with no local coronavirus cases.
  4. Sports: MLB to investigate Dodgers player who joined celebration after positive COVID test.
  5. 🎧Podcast: The vaccine race turns toward nationalism.

The norms around science and politics are cracking

Illustration: Aïda Amer/Axios

Crafting successful public health measures depends on the ability of top scientists to gather data and report their findings unrestricted to policymakers.

State of play: But concern has spiked among health experts and physicians over what they see as an assault on key science protections, particularly during a raging pandemic. And a move last week by President Trump, via an executive order, is triggering even more worries.