Question

Do some research into companies that have had an IPO (initial public offering) in the last couple of years and answer the following questions:

1. How is their stock performing compared to the IPO? Were they over hyped initially?

2. Do you invest in stock, why or why not? If you do, how do you determine what to invest in?

Answer 1

1. In the last couple of years, a lot of companies have had an IPO (initial public offering). One such company is Uber Technologies Inc. The company raised more than $8 billion. The IPO was priced at $45 a share. However the stock opened at $42 I.e 6.7% below the IPO price and the stock closed at $41.57. The stock is trading at $40.64 on 19.02.2020. The stock is performing well as compared to IPO as it has certainly recover the losses it had made in the listing week. Also the markets had a lot of expectations from the IPO making it one of the most anticipated IPO of 2019. So according to me the IPO was over hyped initially. But as the trade tensions between USA and China began to settle, the stock showed a positive momentum. Also it's other businesses started to gain and recover from the initial losses.

2. Yes I invest in stock market. The decisions of investing in market depends on various factors like:

1) Overall financial and macro economic condition of the sector in which the company operates

2) Favourable Governments policies towards the sector

3) Beta of the company

4) EPS/ Book value of the company and its comparison with other companies in the same sector

5) Dividend yield of the company

6) Past returns obtained by the investors from the market relating to such company

7) Profitability and Liquidity ratios of the company

8) Shareholding pattern of the company ( How much shares are being held by promoter of the company)

9) Whether any pledged shares are held by the promoters

All these factors should be kept in mind while investing in the market