Company Historic Stock Returns
Order ID:89JHGSJE83839 Style:APA/MLA/Harvard/Chicago Pages:5-10 Instructions:
Company Historic Stock Returns
- Identify an initial public offering (IPO) that has been announced and completed at least 3
years back (since 3-year post-IPO price performance is required).
- Compute underpricing (1st day closing price – IPO price) / IPO price. Compare it with the
market return on the IPO day.
- Compare the stock performance with market (S&P500) performance over 3 year
following the IPO. Download historic stock returns from yahoo.com. Draw a graph of
compounded daily stock returns and compounded daily market returns from the 2nd
trading day to 3 years after the IPO. That is,
2nd day compounded return = (2nd day closing price – 1st day closing price) / 1st day
closing price
3rd day compounded return = (3rd day closing price – 1st day closing price) / 1st day
closing price
Make sure that the prices are adjusted for dividends and stock splits (use adjusted closing
price in yahoo.com). Both the stock return and the market return should be plotted on the
same graph.
- Collect and summarize relevant information (search for prospectus on SEC website) that
was distributed to the public before the IPO. At the very least, include the following.
Wherever possible, summarize using tables
- Sales, asset, and net income for the year before the IPO.
- 3-year growth (annualized) in sales, assets, and net income before the IPO
- What is the market capitalization of the firm based on IPO price?
- What is the value of the firm of the firm (assume book value of debt = market value
of debt) based on IPO price?
- Compared to others in the industry, how big is the firm based on market cap?
- What is the amount of $ raised at IPO?
- What is the proposed use of these $? How much of it is being used by the firm to
grow the business and how much of it is due to sale of shares by existing
shareholders?
- How does the above compare with the assets already owned by the firm? That is,
what asset growth can we expect in the IPO year?
- What type of IPO (firm commitment versus best efforts versus Dutch auction)?
12
- Was there any revision (upward or downward) in the offer price prior to IPO? If so,
what reasons were given?
- What is the IPO price compared to final offer price range?
- How did the underwriters justify the offer price?
- Who are the underwriters of the IPO?
- Is the IPO firm funded by a Venture Capitalist or Private Equity group?
- What is the underwriting fee/share compared to net price/share received by the firm?
- What is the estimate of total transaction cost (including underwriting fee) as a % of
cash received by the firm?
- Are management and VC selling their holdings?
- Were there other firms from the same industry that went public in the 12 months
surrounding the IPO?
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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