Google Case Study

1. Give the following for the Google IPO: the initial filing range (for both price and number of shares); the revised range; the offering price; and the closing price and trading volume for each day of the first week of aftermarket trading. To get closing prices and volume, you’ll need to use a source such as Yahoo Finance.

On 8/18/05 Google slashed its planned IPO by nearly half, cutting the expected price to $85 to $95 a share from its original range of $108 to $135 a share. It later confirmed its initial going-public price would be $85 a share. Google initial offering price set at $85, at low end of company's expectations GOOG shares initially priced low at $85 each. This was after a downward price revision. This lower price was a disappointment for the brightest internet star to come along in many years. Google offered 19,605,052 shares in total, and offer amount was $1,666,429,420.00.

Date                     Open        High        Low        Close        Volume           Change %           Historical Rating

08/27/2004        54.22        54.48        53.01        53.24        6,198,763        - -1.63%        0 Stars: Appealing

08/26/2004        52.64        54.14        52.49        54.12        7,080,415        + +1.80%        0 Stars: Appealing

08/25/2004        52.64        54.17        52.10        53.16        9,169,830        + +1.08%        0 Stars: Appealing

08/24/2004        55.79        55.97        51.95        52.60        15,217,335        - -4.14%        0 Stars: Appealing

08/23/2004        55.55        56.92        54.69        54.87        18,224,066        + +1.01%        0 Stars: Appealing

08/20/2004        50.90        54.71        50.41        54.32        22,788,443        + +7.95%        0 Stars: Appealing

1. From the chart above, Google is a flat opening I believe. But it could not eliminate flippers, Google decided to sell its stock via a modified Dutch auction, in which the stock was sold at a price less than the market-clearing price. The Dutch auction method was meant to give individual investors a chance at the IPO instead of the usual bystander's role, watching from the sidelines as major investors and houses bought up all the shares. It worked, but it left the underwriters and the companies who usually profit from their mutual deals fuming. Google also paid the underwriters a fraction of the commission they usually earn.

1. At 2.8% of the total offering amount, which was 2.8% of $1.67 billion, still amounts to about $47 million. Fees were "the third-lowest on record for U.S. IPOs of $1 billion or more," the Wall Street Journal reported.