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Dear Forbes, This Isn’t How It Works



If even the “capitalist tool” can’t get the details of capitalism right then what hope for everyone else? This simply isn’t true:

Quicken Loans IPO Boosts Billionaire Dan Gilbert’s Fortune By More Than $33 Billion

No, that’s not how it works.

Detroit billionaire Dan Gilbert, who founded mortgage firm Quicken Loans 35 years ago, took the company public Thursday on the New York Stock Exchange for the second time in its history. With shares trading at $19.30 at 12:45 pm ET, Gilbert’s 95% equity stake in Quicken Loans parent Rocket Companies is worth $36.4 billion. Gilbert also sold $1.76 billion of Rocket Companies shares in the IPO. With his other assets — he owns the Cleveland Cavaliers NBA team and a significant chunk of real estate in Detroit — he’s worth $41.1 billion.

That makes Gilbert, age 58, the 17th richest person in America, and the second richest NBA team owner. Forbes had previously valued Gilbert’s stake in Rocket Companies at $4.1 billion.

Quicken Loans, or if you prefer Rocket Companies, was worth some amount before the IPO. It was worth some amount, say, 20% less than the stock is trading at now because that’s what they priced the stock at in the IPO.

That is, the IPO could add value by making the holding more liquid. Or it could simply be the process of price discovery leads to a better appreciation of the price. But the company really was worth something before the IPO. The best guess at that value being the amount they priced it at in the IPO.

You know, Dan could have sold either Quicken or Rocket for some amount without doing an IPO maybe?

Now, it’s true that The Forbes estimation of that value was rather different from the market guess at it. But it’s markets, not journalists, that win in such pissing matches. Things in a market are worth what the market says they are worth.

So, no, Gilbert’s net worth did not rise by $33 billion at the IPO. Forbes’ estimation of it might have but that’s Forbes’ problem not anyone else’s.




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in British English
expunct (ɪkˈspʌŋkt)
VERB (transitive)
1. to delete or erase; blot out; obliterate
2. to wipe out or destroy

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