case on netscape
If the price rises in an initial public offering then the stock is called a hot issue.
Netscape Communications (NSCP) was the classic hot issue. It went public August 9, 1995 at an offer price of $28. On the same day it hit a high of $74¾ and closed at $58¼. Netscape hit an all time high of $174 in December 1995 and split 2:1 February 7, 1996.
In the long term, however, Netscape wasn’t that hot an issue. A year after the initial public offer Netscape Communications was trading below $30 a share.
(Adjusted for the split the offer price was $14 and the high on the issue date was $37 . It reached a high of $87 in December 1995).
Of course, that was before it merged with America On-Line (AOL) in March 1999.
A3. Going public and offering stock in an initial public offering represents a milestone for most privately owned companies. A large number of reasons exist for a company to decide to go public, such as obtaining financing outside of the banking system or reducing debt.
Furthermore, taking a company public reduces the overall cost of capital and gives the company a more solid standing when negotiating interest rates with banks. This would reduce interest costs on existing debt the company might have.
The main reason companies decide to go public, however, is to raise money — a lot of money — and spread the risk of ownership among a large group of shareholders. Spreading the risk of ownership is especially important when a company grows, with the original shareholders wanting to cash in some of their profits while still retaining a percentage of the company.
Before deciding whether or not to go public, companies must evaluate all of the potential advantages and disadvantages that will arise. This usually will happen during the underwriting process as the company works with an investment bank to weigh the pros and cons of a public offering and determine if it is in the best interest of the company. There are many advantages for a company going public.
1. The
Netscape Communications (NSCP) was the classic hot issue. It went public August 9, 1995 at an offer price of $28. On the same day it hit a high of $74¾ and closed at $58¼. Netscape hit an all time high of $174 in December 1995 and split 2:1 February 7, 1996.
In the long term, however, Netscape wasn’t that hot an issue. A year after the initial public offer Netscape Communications was trading below $30 a share.
(Adjusted for the split the offer price was $14 and the high on the issue date was $37 . It reached a high of $87 in December 1995).
Of course, that was before it merged with America On-Line (AOL) in March 1999.
A3. Going public and offering stock in an initial public offering represents a milestone for most privately owned companies. A large number of reasons exist for a company to decide to go public, such as obtaining financing outside of the banking system or reducing debt.
Furthermore, taking a company public reduces the overall cost of capital and gives the company a more solid standing when negotiating interest rates with banks. This would reduce interest costs on existing debt the company might have.
The main reason companies decide to go public, however, is to raise money — a lot of money — and spread the risk of ownership among a large group of shareholders. Spreading the risk of ownership is especially important when a company grows, with the original shareholders wanting to cash in some of their profits while still retaining a percentage of the company.
Before deciding whether or not to go public, companies must evaluate all of the potential advantages and disadvantages that will arise. This usually will happen during the underwriting process as the company works with an investment bank to weigh the pros and cons of a public offering and determine if it is in the best interest of the company. There are many advantages for a company going public.
1. The