PPO – PremInitial Public Offering

With the lack of pop in the Zynga (ZNGA) IPO there have been calls that the IPO market is now smart enough to avoid the whole bubble plague of the late 90s.  I’d like to argue that it’s still there its just that the IPO is no longer the point from which you track bubble behavior.

So really the fundamental question is when is the true IPO? Yes there is the technical definition involving S1 filings and such but since the last bubble there has been the rise of the private company markets like SecondMarket and one could argue that Zynga amongst others started trading pseudo publically a long time ago. If you read the press on them in these markets they certainly behaved like the IPOs of yore. Zynga tripled in valuation in these gray markets in 2010/2011.

This is what lead to the valuations that look like  non-bubble  businesses. It really was public mania done in a semi public way that lead to these apparently stable non-bubble IPO valuations.

The problem is there is no term for this and if you can’t name it you can’t track it. So I would like to propose a name. When a private company begins trading on a private company “gray” market like Second Market it should be called a PPO – PremInitial Public Offering so that way we can still track it’s valuation pop and call it a bubble when price swings outpace fundamentals. It foresees the bubble before the IPO.