Are their any companies that have recently had an initial public offering?

Question

Did the company need to go public to meet financial needs?
As an investor would you have been willing to purchase the company's stock at the offering price? why? why not?

Answer 1

A recent one was Crocs (ticker:CROX), they make a type of shoe that is getting fashionable.

They went public to finance their expansion, so, not necessarily their immediate financial needs, but their growth plans.

I would not have purchased at the offering price. Unless the market is going straight up - like in the late 90's - there is always a certain amount of risk in purchasing a never-before-traded stock. There are defined events in the future that will cause a stock decline - such as indsider options unlocking at 6 months, and any forecasted growth is likely built into the share price. Plus the company has been marketing itself so people probably aren't pricing in all of the potentail problems and the competitive response from other firms, when they realize that their competition has a boatload of money.

I generally don't have the option of buying at the offering price as those shares are allocated by banks and brokerages to large clients. The first time most epople would be able to purchase it would be on the beginning of the first day after the IPO, and if its a good looking compnay, this will probably already be higher than the offering price.

Hope this helps!

Answer 2

Vonage(VG) recently went public. It was quite a fiasco.

In answer to your questions, think of an IPO as a financing tool. It has at least 2 obvious functions--

1) It can be difficult to find an accredited investor to purchase large amounts of non-public stock from you, so if you are an existing owner at the time of the IPO, you can now sell your stock in the company freely to anyone out there willing to buy it on the stock market. This means a higher degree of liquidity.

2) An IPO (and any follow-up stock offerings) brings in a good deal of cash into the company that will not require regular debt payments (as a loan might). The costs underlying equity issues are reported to be nearly equal with that of debt issuance by many of the major financial papers, but I have no idea if this is correct personally.

As an investor, an IPO is a tricky thing. You have a company that has no public history and very little public information available. How do you know if the price is good? Basically, you can't. Not until it has been traded on the market for awhile. I generally steer clear of IPOs, and frankly, my broker has offered very few to me so far... all of them been proven to have been dogs.

Wait for awhile after any stock IPOs before you buy unless you are an expert at financial analysis and risk management.