Facebook Ipo Case Study

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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…
Download the list of IPO firms with their issue price and the first trading day closing price from Morningstar DatAnalysis. The initial offering price is called the issue price in DatAnalysis. Please make sure that you select the adjusted price for the closing price. Critically analyse the results of your calculation using the entire sample and describe the insights that could be gained from the calculation. For instance, you could describe the results of the analysis using simple descriptive statistics such as mean, median & etc. or frequency distribution. Next, categorise your data/calculations into groups using 3 variables such as industry and describe what additional insights you could gain from the analysis. You must decide on your own the grouping variables to be used and provide the justification(s) for your selection. Also, list any assumptions made in the analysis. (5 marks) 2. How do the IPO firms perform after the IPO? Examine the performance of IPO firms analysed in Question (1) 2 years after they were listed on ASX using the 2-year holding period return. Compare and contrast the 2-year performance with the initial return based on the grouping 3 variables chosen in Question (1). The formula for 2 year holding period return (Ritter, 1991, p.14) is  P − Pt  2 − year holding period return =  2  × 100  Pt  P2 = the adjusted closing price on the 2-year anniversary. If
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