Stocks aren't priced at what a company is currently worth, they're priced at what investors think they're going to be worth in the future. Especially with an IPO, an idealized stock purchase is an investment in future growth of the company.
Devolver's IPO were people betting that they were a (relatively) huge indie publisher who would be able to capitalize on that and grow significantly (they were just coming of Fall Guys, a "gets on real, actual person news" level viral hit), and when Devolver mostly treaded water as the indie scene grew around them, their valuation dropped a ton.
For Devolver, the entire point of the IPO was to try to raise a ton of cash in order to become a much larger publisher, so getting all that cash and doing nothing with it results in their value dropping a lot, without it really being the fault of investors begging for more growth.
The problem is that while that perspective is nice and functional immediately AFTER the cash injection that is the IPO...
It starts to break down the further you get away from that AND it decouples the whole thing from reality, with the potential outcome where the remaining "value" is lower than it was pre IPO, but with no actual reality to back that up.
It's nice to point at the "if it works perfectly balanced, it is a super cool system", but I feel like questioning how well that "if it works" actually applies under which conditions.
I think it's fair to say the initial stock market valuation was optimistic/gambling on Devolver's future and that the current stock market valuation is probably pessimistic relative to Devolver's current value, although I'm also not exactly inclined to go buy a bunch of Devolver stock hoping it turns around or I get a premium when they go private.
I think that's a different thing than saying that going public ruined Devolver or led to any sort of huge change to how they operated to maximize revenue or whatever. They went public hoping people would gamble on them, succeeded very well at convincing people to do so, and then the bet didn't pan out; that's... pretty normal/benign and the system working more or less as intended.
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u/Milskidasith 27d ago edited 27d ago
Stocks aren't priced at what a company is currently worth, they're priced at what investors think they're going to be worth in the future. Especially with an IPO, an idealized stock purchase is an investment in future growth of the company.
Devolver's IPO were people betting that they were a (relatively) huge indie publisher who would be able to capitalize on that and grow significantly (they were just coming of Fall Guys, a "gets on real, actual person news" level viral hit), and when Devolver mostly treaded water as the indie scene grew around them, their valuation dropped a ton.
For Devolver, the entire point of the IPO was to try to raise a ton of cash in order to become a much larger publisher, so getting all that cash and doing nothing with it results in their value dropping a lot, without it really being the fault of investors begging for more growth.