VS Media Holdings (NASDAQ: VSME) stock is down 50% and change. It’s possible to see this VSME price change as a horrible failure for the company. Which is the wrong way around to think of these things. It’s a problem for, a failure for, those who bought into the IPO, sure. But it’s a great success for the company. Selling something for more than it’s worth after you’ve sold it is a success.
As to what actually happens at VS Media: “VS MEDIA Holdings Limited, an investment holding company, operates a network of digital creators who create and upload content to social media platforms, such as Facebook, YouTube, Instagram, and TikTok. The company was founded in 2013 and is based in Kwun Tong, Hong Kong.” Oh, right. So we’ve something vaguely digital and Far East and it’s going to be worth a fortune, right? Like AMTD and TOP Financial. A soaring post-IPO price buoyed up by releases about how lovely things are going to be? Well, we guess we could be that cynical.
And we might even think that’s the plan too: “VS Media Holdings, a Hong Kong-based company managing a global network of digital creators on social media platforms such as YouTube, Facebook, Instagram, and TikTok, announced the closing of its IPO of 2 million ordinary shares priced at $5 per share on Monday. On Wednesday, the company announced its expansion into Macau through a partnership with partnership with MLink Limited, a Macau-based company providing hospitality services to visitors.” Benzinga being the sort of place we might get such announcements too.
VS Media Holdings stock price from Google Finance
Some believed it for a bit perhaps but clearly not all that many for all that long.
The point we really want to make here though is that about an IPO. It is them, the company, selling something to us, the investors. If the stock price really leaps after an IPO then sure, we investors think that’s great. But that’s also money the company could have had but we now do. Equally, if they get stock away at $5 - the VS Media IPO price - and then 5 days later it’s $2 then the company has won. They’ve sold something for $5 when 5 days later it was worth $2 - they’re ahead of the game.
Yes, yes, we know, that’s not how it’s normally laid out. We normally say that a pop is a success. But that’s not true - or at least it’s only true from one point of view. A falling stock price after an IPO is a victory for the company selling the stock. Don’t forget this - they’re trying to sell something to us therefore caveat emptor, always.
