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Essay / Research Paper Abstract
A 6 page paper discussing Google's use of the Dutch auction IPO rather than the more traditional approach, for the purpose of determining whether more companies should consider using it. Google's immense success with its IPO likely rests more with the company and investors' leaves of senses in their willingness to pay for a stock with a P/E of nearly 68 than with any "magic" connected with the manner in which it conducted its IPO. The difference between Google's offer price and opening price also suggests that the pricing mechanism was not efficient. No statistician would base any firm conclusion on the outcome of a sample of two. At present that is all there is to assess, in the forms of Google and Morningstar. The auction approach may be right for individual companies, but those choosing that route should expect results more on the order of Morningstar than of Google. Bibliography lists 9 sources.
Page Count:
6 pages (~225 words per page)
File: CC6_KSstockGoogIPO.rtf
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Unformatted sample text from the term paper:
on Google as it conducted its initial public offering (IPO) in an unorthodox manner in keeping with its unorthodox approach to operating a search engine. The move certainly paid
off for Google, but the approach most likely will remain the exception rather than the rule of IPOs. Considerations for the IPO At
the time of the decline of the stock market in the summer of 2000, the Dow Industrials average routinely closed at more than 11,000. The market had expanded to
greater levels than some observers formerly believed to be possible, and more cautious investors had been expecting a "market correction" for some time. The correction that occurred in 2000
still is operational in many respects, though the Dow has recovered and surpassed its former total value. Though there have been some strong individual performers in the meantime, many
investors lost significant "paper profits" in the markets decline and later chose to place their investment funds in vehicles other than the market.
The fact that there was a correction in the market in itself is nothing remarkable. Some observers said before the decline that the "new economy" had redefined the old
laws of economics; the markets behavior in the past several years indicates that not only are those old laws still relevant, they also are quite influential and extremely difficult to
alter. By 2002, many companies that had intended to go public prior to the "correction" put those plans on hold, deciding to postpone
their IPOs until market conditions were more favorable. One author noted that "Wall Street insiders say they cannot remember a tougher year for IPOs -- but whats worse is
...