The good, the bad and the IPO

Yesterday we saw the return of IPOs (Initial Player Offerings) to the platform. It’s been many months since the last time players were added to the Index and we’ve had a huge influx of new traders since so, for many traders, this was a whole new experience.

For more seasoned traders, there’s was a collective holding of breath when we realised that FI were intending to use the same IPO process as before, basically ‘fastest finger first’. We’d seen previous IPOs reach sky-high levels in seconds with bots (allegedly) clearing up much quicker than a human ever could. Once the player hit a certain price point, the bots (or traders) would then sell off, leaving a quickly collapsing price with some other traders getting burned in the process.

So it’s fair to say that we weren’t feeling terribly optimistic about yesterday.

Despite that, I put £100 aside to test out the process – I wanted to see if it ‘felt’ any different and whether there might be some opportunity to make some profit from IPOs in the future.

The good

Something certainly did feel different. I’m not particularly quick off the draw with IPOs but even I managed to get onto a couple of them before they hit peak price – Callum Robinson at 68p (he peaked at 76p) and Gabriel Martinelli at £1.20 (peak of £1.37). I’ve seen more committed traders (the sort that have two screens open, plus their phone) get on for just a few pence above the IPO price. I’m sure the share split has made a difference here as it now takes around 900 futures to move a price 1p, but I’m also cautiously optimistic that FI might have found and dealt with the bot issue.

The other difference this time is that prices didn’t crash anywhere near as hard as I’ve seen previously. Most seem to be holding their value this morning at only a few pence off their peak price. Is this also related to the 900 futures to move 1p change, or does this suggest that FI are bringing on the right players at the right time, and that traders want to hang onto them instead of flipping them? I’m not sure nut I would imagine it certainly makes the whole process feel a little less scary to a newcomer left holding the player after the dust has settled.

The bad

Unfortunately, the FI tech side of things had a complete breakdown yesterday and that is what will inevitably dominate our thinking about what happened.

Early doors, many traders were hit by a bug that asked them for age verification on signing in. Luckily this seemed to be a short-lived glitch but understandably caused some niggles as traders worried that they’d be excluded from the IPO process altogether.

Predictably, the servers couldn’t keep up with the demand and traders were regularly getting stuck on loading screens or just seeing empty pages. This has happened before for deposit bonuses and the share split, and I do wonder what FI are planning to do to keep up with the growing number of traders using the platform. Investment in tech is absolutely key at this point but I think we’ve all been banging that drum for many months now…

Of course the worst issue of all, and the one that caused FI to bring the whole process to a halt, was the problem with futures selling at the wrong price. I noticed this early on after selling my Robinson futures for 74p but only receiving 68p. I thought maybe I’d missed something at the point of sale, but then when I sold Martinelli at £1.36 but only received 86p per share, I knew something was seriously broken.

This issue has happened before at a time of high traffic on the platform so I presume that FI are aware of what is causing the underlying issue. For me, I’m about £42 out so I’m not desperate for the cash, but I’ve seen traders who are hundreds of pounds out and justifiably angry about this – especially as it stopped them getting involved in the later IPOs as they didn’t have the money to cover it.

The ugly

This all spilled over onto twitter of course – not a great look for FI when they are actively marketing the product ahead of the new season. So should we have stayed quiet?

There is definitely some merit in not washing our dirty laundry in public as confidence in the platform is good for all of us. Having said that, when I first noticed my sales were out, I wasn’t sure if it was just me or whether it was a global issue – being able to talk about it on social media allows us all to know what’s going on. Full credit to FI customer service for getting a tweet out early to that effect (but please make sure it’s pushed through the app and emailed next time too).

The other twitter argument was about whether buying IPO players just for a quick flip is the same as ‘pumping and dumping’. I think it’s a tough ask to tell traders not to buy into players unless they want to hold them for the long term, especially as the platform becomes more and more focused on short term trading. Also the current system doesn’t actively stop traders from selling IPO players off – although instant sell is disabled, there’s nothing to stop an almost instant market sell. If you buy a player and they hit your target sell price within 10 seconds instead of 10 weeks, why wouldn’t you sell?

There are different ways to play the game but I think we have to be realistic – traders will work within the rules that are given and IPOs are an opportunity to buy low and sell high, making a good profit in seconds if you time it right. The main beneficiary of the whole process is FI themselves and I don’t think new traders have been massively burned given that players have more or less retained their peak prices (presuming the money lost from wrongly calculated sales is refunded quickly). At the end of the day, no one has to get involved if they don’t want to.

Me? I think I’ll give IPOs another shot if or when they return. FI still need to find a fairer process (maybe something along the lines of blind auctions?) but in the meantime there is profit to be made, if you time things right.

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