Yet frankly, the whole thing is absurd. The stock is so overvalued as to take your breath away. It's as if we have just gone into the Wayback machine and ventured right into 1999, the epicenter of the dot-com bomb blast.
Yet, here's a shocker. You shouldn't blame management or the underwriters for this travesty of a valuation. This was no Facebook (FB). They really did everything right. Management didn't choose to sell any on the deal. In fact, many insiders bought on the deal. Neither Morgan Stanley, Goldman nor management elected to raise the price of the deal to anywhere near where the demand was, so as not to be too greedy. The company allowed 14% of its stock to go public, so it is not one of those sliver deals I talk about, the ones where so little is offered that it has to pop no matter what.
And most important, Chairman and Co-CEO Aneel Bhusri wasn't perturbed or upset that the bankers left so much on the table. It would have been reasonable to think that Workday had a right to demand every last dollar, but Bhusri told me and my colleagues at "Squawk on the Street" that he wanted the deal priced as close to the comparables, the other companies in the space, and not a penny more than that.
They were anything but avaricious vs. the greedy ravenous buyers.Nevertheless, even as everyone involved with bringing this deal did everything right, we are stuck with an opening that immediately took the company's stock to the stratosphere of valuations. How can that happen? Simple. This is a tech company with sustainable long-term growth coming public at a time when one of the largest sectors of the S&P 500 has so little growth to go around that it's become a pathetic parody of a cohort. When the personal computer market away from Apple (AAPL) is shrinking, when spending on hardware is being radically curtailed in large part because of the cloud, but also because of slowing economies worldwide and when two cell phone companies are crushing everyone else, there's a terrible dearth of high-growth companies to choose from.
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