Facebook Ipo Case Study Essay

1158 Words Aug 11th, 2012 5 Pages
Background Facebook’s IPO (Initial public offering) is one of the world’s largest initial stock offerings, raising $16 billion for the company. Facebook made its stock market debut on May 18 with an initial offering price of $38 per share, but closed at $38.23, a slight 0.61 per cent up (Associated Press, 2012). The typical big first-day pop in the share price seen in other technology companies’ IPOs that many investors had expected did not materialise. Instead, its stock price has tumbled since. On the close of its 12th trading days, Facebook’s stock price fell to $25.87, a drop of 31.9% from its IPO price. The highly anticipated IPO has now turned into a debacle, sparking fury among investors which led to the filing of a number of …show more content…
Select and discuss 2 theories/propositions in your opinion that provide the most plausible explanations for the occurrence of short-run IPO underpricing in the US or Australian stock market. Perform some background research and use the findings to justify your selection. You are expected to use at least three academic references for this task. You may use articles from academic journals or textbooks but Not Wikipedia or other non-academic internet websites. (5 marks) Discuss the reasons why Facebook IPO failed to result in a large initial return. You may use academic and non-academic resources (i.e., news articles, magazine articles) for this task but NOT Wikipedia. (5 marks)


Please note that 2 marks are allocated for referencing. (5 + 3 +5 + 5 + 2 = 20 marks) Useful resources You will need to read and understand chapters 10 (pp.311-321) and 13 of your textbook. Since chapter 10 will be covered in week 8, a certain level of self-study is required to complete this assignment. You are expected to do research outside of lecture time on your own using library/online sources, process the information gathered and write an organised well-thought out

Related Documents