PLEASE READ THE BELOW ESSAY AND WRITE A SUBSTANTIVE 300 WORD REPLY Make Sure That You Are Adding New And Relevant Information With Each This Reply

  PLEASE READ THE BELOW ESSAY AND WRITE A SUBSTANTIVE 300 WORD REPLY Make Sure That You Are Adding New And Relevant Information With Each This Reply 

Before we begin discussing the company chosen for discussion here, we should understand what an IPO is. According to Investopedia.com (n.d.), “an initial public offering (IPO) is the very sale of stock to the public. Prior to an IPO the company is considered private, with a relatively small number of shareholders made up primarily of early investors and professional investors”.

Initial public offerings by and large include at least one investment bank known as a " guarantor". The organization offering its shares, called the "backer", goes into an agreement with a lead financier to pitch its shares to people in general. The guarantor at that point approaches financial specialists with offers to offer those offers. A huge IPO is typically guaranteed by a " syndicate " of investment banks, the biggest of which take the situation of "lead financier".

The company that I chose that recently went IPO is Trivago, N.V, which is a hotel search platform. The company’s stock price prior to the actual IPO date was around $7.15, based upon the information retrieved about the company’s stock history. The company went IPO in 2016. The company’s stock price began at $11.20 on the day of the IPO and closed at that time closed at $11.65. The company’s high around that timeframe was $10.05 and its low was $4.01.  The company’s current price is $6.59 (Nasdaq). Most of the company’s stock is held by Expedia.

Hitchner (2017) states, “The pre-IPO studies calculate implied discounts for lack of marketability (DLOM) based on a comparison of the price of securities before and after an initial public offering (IPO). Since the early 1970s, these studies have been utilized to estimate DLOM by comparing the price of an equity interest in a company prior to IPO as reported in SEC filings to the trading price of common stock in the same company after the IPO” (p. 422).

There is reason to believe that the initial estimation of value was incorrect. The company was hoping for shares to begin at $13.00 or $14.00 when the IPO began. Because the stock price has only fluctuated between $7.44 and $4.30, it has yet to reach this goal. “Shares of an IPO is typically volatile, especially when it is a “hot” issue, in the first several days after a debut. Since companies only go public once, an IPO is a once-in-a-lifetime opportunity for investors. Still, a lot of the immediate gains are fueled only by hype and not by the company’s financials” (Alter, 2016).  

References

Alter, D. (2016, December 16). Why Trivago Stock is Up Following IPO. Retrieved November 14, 2018, from Moneymorning.com: https://moneymorning.com/2016/12/16/why-trivago-stock-is-up-following-ipo/

Hitchner, J. R. (2017). Financial Valuation: Applications and Models. Hoboken: John Wiley & Sons, Inc.

Initial Public Offering-IPO. (n.d.). Retrieved November 14, 2018, from Investopedia.com: https://www.investopedia.com/terms/i/ipo.asp

TRVG. (n.d.). Retrieved November 14, 2018, from Nasdaq.com: https://www.nasdaq.com/symbol/trvg/premarket