Thread by @jaminball

Unity IPO will be a very interesting one to track - they're breaking from the traditional pricing mechanism. Typically investment banks take companies on a roadshow, collect and manage orders / allocations from large institutional funds, and then ultimately help set price

The Unity team is maintaining full control of pricing / allocations. They will collect bids from funds that have a price and a preferred # of shares. Based on all of these bids, the Unity team will then come up with a price.

Any fund with a bid below the price won't receive an allocation (no shares). For funds with bids at or above the selected price, the Unity team will decide how many shares to allocate (can be full or partial fill of the desired total).

It's still manually allocated (so we'll see how much better the Unity team can do than the bankers!). Their hope is to avoid the situation of bankers setting a lower IPO price to satisfy their "favorite" large investors

It's different than Google's dutch auction IPO process many years ago (because Unity is still manually setting price / allocations).

My take is they may be able to get ride of some of the "day 1 pop," but it largely won't change things

IPOs generally pop on day 1 because of the unique supply / demand dynamic - low float of shares end up trading (bc of lockup) which artificially can prop price up and cause it to "pop." Unfortunately that dynamic doesn't go away with Unity's structure.

I could be wrong, but this seems more like bells and whistles, than any kind of meaningful change to the IPO process. At the end of the day it does give the control to the company, which is a good step in the right direction, but it's still done manually

Now this is an interesting development: adding to the supply of shares that trade on day 1 (increasing the float) could really help they dynamic I described above