Share these talks and lectures with your colleagues
Invite colleaguesWe noted you are experiencing viewing problems
-
Check with your IT department that JWPlatform, JWPlayer and Amazon AWS & CloudFront are not being blocked by your network. The relevant domains are *.jwplatform.com, *.jwpsrv.com, *.jwpcdn.com, jwpltx.com, jwpsrv.a.ssl.fastly.net, *.amazonaws.com and *.cloudfront.net. The relevant ports are 80 and 443.
-
Check the following talk links to see which ones work correctly:
Auto Mode
HTTP Progressive Download Send us your results from the above test links at access@hstalks.com and we will contact you with further advice on troubleshooting your viewing problems. -
No luck yet? More tips for troubleshooting viewing issues
-
Contact HST Support access@hstalks.com
-
Please review our troubleshooting guide for tips and advice on resolving your viewing problems.
-
For additional help, please don't hesitate to contact HST support access@hstalks.com
We hope you have enjoyed this limited-length demo
This is a limited length demo talk; you may
login or
review methods of
obtaining more access.
Printable Handouts
Navigable Slide Index
This material is restricted to subscribers.
Topics Covered
- IPOs
- IPO mechanics
- IPO underpricing
- Zoom IPO attempt
- WeWork IPO attempt
Talk Citation
McDonald, M. (2021, September 29). Zoom and WeWork: understanding IPO underpricing [Video file]. In The Business & Management Collection, Henry Stewart Talks. Retrieved December 14, 2024, from https://doi.org/10.69645/AHKN6720.Export Citation (RIS)
Publication History
Extended-form Case Study
Zoom and WeWork: understanding IPO underpricing
Published on September 29, 2021
8 min
Transcript
Please wait while the transcript is being prepared...
0:00
Hello and welcome to the case of Zoom and WeWork, understanding IPO underpricing.
I'm Professor Michael McDonald, I'm a professor of finance at Fairfield University in Fairfield, Connecticut.
Today I'd like to talk to you about a really interesting phenomenon in the capital markets,
that is, the substantial amount of capital that's left on the table by IPO issuers.
0:28
IPOs (initial public offerings) are the first time that a company sells stock to investors.
In an IPO, investors are, in essence, betting on the chances of a company succeeding in the future.
Some companies succeed enormously - take Netflix or Amazon as examples -
but then other firms struggle, Noodles or Groupon might be examples of these,
at least based on their stock prices post-IPO.
Investors have a difficult task, they have to try and predict what a company's future looks like,
but without the benefit that is normally available to stock investors.
That is, without the benefit of historical financials, or any kind of
stock price history that you'd have when dealing with an existing company
(or an existing stock, I should say).
1:19
IPO mechanics are fairly straightforward, but basically IPOs are sold by investment banks
on behalf of the issuing company.
In other words, a company comes to an investment bank looking to raise money,
the investment bank then runs a 'roadshow', telling potential investors
why the company will be a big success in the future.
Based on the level of enthusiasm the investors show, the investment bank prices the IPO
at the IPO price.
That price is what investors who buy into the IPO pay, just before it goes public.
In other words, the IPO price is not the same thing as the price
the stock starts trading at on its first day of trading,
it is the price that IPO investors pay to buy into the company
before the firm actually begins trading.
That's important.