Totally agree. The over allotment will be bigger than the % they would get for underwriting if the stock pops big. However, putting a big IIPO pop down to immorality when the reality is that the stock in no way justifies that type of value is wrong.
If an underwriter gets a reputation for leaving loads of $ on the table business will dry up. Similarly if they can’t complete the underwriting because of too high a price it is a disaster. Most people forget that when Facebook came out the underwriting was weak and regular investors could get all the shares they want. It traded under it’s IPO price for quite awhile.
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