The No. 3 stock exchange operator in the U.S., BATS (BZX:BATS) — or Better Alternative Trading System — had a disastrous IPO today. The company priced its shares at $16, which was at the low end of its $16 to $18 range. And then the stock plunged to below a penny. These trades have actually been cancelled and the IPO has been halted.
Keep in mind that BATS listed its IPO shares on its own exchange. Unfortunately, it looks like its computers went berserk. They even resulted in a 9% plunge in Apple’s (NASDAQ:AAPL) shares (the stock is back to normal levels). That would have been a loss of $50 billion in market cap!
If this weren’t bad enough, there’s also a big story in The Wall Street Journal today about how the Securities & Exchange Commission is investigating high-frequency trading. The article mentioned BATS as one of the targets.
Interestingly enough, BATS has this in its S-1 filing: “Unlike traditional market centers, we are a technology company at our core. We developed, own and operate the BATS trading platform, which we designed to optimize reliability, speed, scalability and versatility.”
Well, not so for today.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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