Jet Blue Ipo Advanced Corporate Finance

1654 Words Jun 22nd, 2013 7 Pages
Case Study #28: Jet Blue Airways IPO Valuation.

Brendan Sookraj

Webster University

FINC 5880

Summer 2013

June 27, 2013

Author Note

Certificate of Authorship: This paper was prepared by me for this specific course and is not a result of plagiarism or self-plagiarism. I have cited all sources from which I used data, ideas, or words either quoted or paraphrased.

Date : __________________________ Signature:

Abstract

As a giant in the airline industry, JetBlue
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Though in lieu of this significant increase in short-term debt management, the current ratio has potential to improve, which is justified by initiating an IPO to provide the company with the liquidity that it has sought after.

Optimal IPO pricing

The recommended course of action in determining an optimal price, at which JetBlue should price their IPO, is a function of a variety of factors: price multiples of industry peers, prior IPO performances with respect to the airline industry, operating performance history, growth prospects, alongside long term profitability. Given the aforementioned factors, to consider an optimal pricing of JetBlue’s IPO, the greatest arsenal in a financier’s tool set in evaluating a corporation’s projected IPO pricing would be the using EEBITDA Multiple. This ratio is a computation that is derived from the basis of understanding and analyzing, in this case, Jet Blue from four primary facets: economic and industry trends, company background, financial statement analysis and market valuation (Kelly, 2009).

The first facet of determining IPO pricing, is understanding rates of growth, both in real and nominal terms, is imperative in

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