I wrote on Friday about the insane bidding that was taking place on eBay for Gmail accounts. For a brief period on Friday the demand for Gmail accounts far exceeded the supply so some people paid $200+ for a single account (Here is the original auction I blogged about that ended up closing at $200.) Given the insane prices the market for accounts was quickly flooded, and at a point this weekend there were over 220 accounts up for sale. From there simple economics took over and with this new supply came lower prices. Accounts are now being sold for around $30.
So why have I posted about this situation 3 times? Well I can't help but wonder if we are likely to see a similar pattern with Google in the near future. As you all know Google has filed for an IPO and will be selling shares through an auction process. There is no way that everyone interested in the Google auction will be able to get certified to participate, and even if they are certified not everyone will win in the auction (you can bid both too high and too low causing you too lose out). So unlike the old days where IPO shares were spread out to friends of bankers through the underwriters, now the more shares will end up in the hands of the public... but not enough shares. So what will we be left with? A small number of people that got in on the auction and the rest of public clamoring for shares resulting in the same insanity we saw in the bidding for gmail accounts. Rest assured though, market forces will fix the problem of supply in the stock market at well... you can be certain the boys over at Sequoia and Kleiner Perkins are looking to dump some shares quickly.
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