To what extent (in dollars and on a percentage basis) was DocuSign’s stock underpriced in its IPO? How much cash (before deducting fees to investment banks) did DocuSign raise? How much more would it have raised if the shares had not been underpriced?
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On April 27, 2018, DocuSign, a California company that provides technology to enable digital signatures on important documents, conducted its initial public offering (IPO) of common stock. In the primary market the company’s shares were priced at $29 per share, but after one day of trading on the Nasdaq, the share price closed at $39.73. The company sold 21.7 million shares in the offering.
- To what extent (in dollars and on a percentage basis) was DocuSign’s stock underpriced in its IPO?
- How much cash (before deducting fees to investment banks) did DocuSign raise? How much more would it have raised if the shares had not been underpriced?
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- On April 27, 2018, DocuSign, a California company that provides technology to enable digital signatures on important documents, conducted its initial public offering (IPO) of common stock. In the primary market the company's shares were priced at $29 per share, but after one day of trading on the Nasdaq, the share price closed at $39.73. The company sold 21.7 million shares int the offering. a. To what extent (in dollars and on a percentage basis) was DocuSign's stock underpriced in its IPO? b. How much cash (before deducting fees to investment banks) did DocuSign raise? How much more would it have raised if the shares had not been underpriced?On September 28, 2017, Roku Inc. (NASDAQ: ROKU) concluded its initial public offering (IPO) of 15,900,000 shares of its Class A common stock and realized net proceeds of approximately $219,420,000. The par value per Class A common stock share is $0.0001. Assume that the market price on the issue date was $13.80 per share. Ignore underwriting and other expenses resulting from the IPO. Questions What is the impact on Roku's balance sheet from its IPO? Does this IPO have any direct impact on Roku's net income? On what section of Roku's statement of cash flows will the cash proceeds from the IPO appear? Will it be an increase or decrease in that section?On August 19, 2004, Google completed its IPO of 20.0 million shares to the initial investors at $85 per share. The closing price of the stock that same day was $94.00. What was the dollar value of the underpricing associated with the Google IPO? (Round answer to 0 decimal places, e.g. 5,275.)
- On April 13, 2017, Yext Inc. completed its IPO on the NYSE. Yext sold 10,500,000 shares of stock at an offer price of $11 with an underwriting discount of $0.77 per share. Yext’s closing stock price on the first day of trading on the secondary market was $13.41, and 85,489,470 shares were outstanding. a. Calculate the total proceeds for Yext’s IPO. b. Calculate the percentage underwriter discount. c. Calculate the dollar amount of the underwriting fee for Yext’s IPO. d. Calculate the net proceeds for Yext’s IPO. e. Calculate Yext’s IPO underpricing. f. Calculate Yext’s market capitalizationFacebook Inc. (now Meta Platforms Inc.) issued 421.2 million class A common shares for $38 per share, on average, in its IPO on 5/18/2012. The par value of the stock was $0.000006 per share. Assume Facebook kept exactly $16 billion of the proceeds from the issue, with the rest being spent on stock issue costs. Record Facebook's entry for the issue of the shares. NOTE: Round dollar amounts to the nearest thousands of dollars.On April 18, 2019, the video conferencing company, Zoom, completed its IPO on the Nasdaq. Zoom sold 9,911,434 shares of Class A stock with one vote per share at an offer price of $36 and an underwriter discount of $1.80 per share. Zoom’s closing stock price on the first day of trading on the sec-ondary market was $62, and 24,070,086 Class A shares were outstanding. There were also 232,318,285 shares of Class B common stock with 10 votes each out-standing and held privately by Zoom insiders. a. Calculate the total proceeds for Zoom’s IPO. b. Calculate the percentage underwriter discount. c. Calculate the dollar amount of the underwriting fee for Zoom’s IPO. d. Calculate the net proceeds for Zoom’s IPO. e. Calculate Zoom’s IPO underpricing. f. Calculate Zoom’s market capitalization assuming that market value per share is the same for both classes of stock. g. What percentage of Zoom’s total common stock (Class A plus Class B) do Class A stockholders own after the IPO? What…
- Cool Company has decided to take their company public on January 1, 2014. Cool company had 1,000 shares authorized. The following transactions occurred. e.) on January 1, 2016, cool company re-issued 1,000 shares of treasury stock at a price of $30 per share. Record the journal entry for this share reissuance. Question: Does the share reissuance in (e) (problem above) affect the income statement? Why or why not?Google sold its shares to the public on Aug 19,2005. The offer price was $74 per share and Google sold 28,406,064 shares. At the close of the first day of trading Google’s share price was $90.43. Money left on the table in Google’s IPO is ?A Brazilian company called Netshoes completed its IPO on April 12, 2017, and listed on the NYSE. Netshoes sold 8,250,000 shares of stock to primary market investors at an IPO offer price of $18, with an underwriting dis-count of 6.5%. Secondary market investors, however, were paying only $16.10 per share for Netshoes’ 31,025,936 shares of stock outstanding.a. Calculate the total proceeds for Netshoes’ IPO.b. Calculate the dollar amount of the underwriting fee for Netshoes’ IPO.c. Calculate the net proceeds for Netshoes’ IPO.d. Calculate market capitalization for Netshoes’ outstanding stock.e. Calculate IPO underpricing for Netshoes’ IPO.f. Explain the IPO underpricing for Netshoes.
- On November 7, 2013, Twitter released its initial public offering (IPO) priced at $26 per share. When the day ended, it was priced at $44.90, reportedly making about 1600 people into millionaires in a single day. At the time it was considered a successful IPO. Four years later, Twitteris trading at around $18 per share. Why do you think that occurred? Is Twitter profitable? How can you find out? If it is not profitable, why do investors continue to support it?The following excerpt is from an article reported in the May 7, 2014, online issue of Bloomberg. (Blomberg) Ford Motor Co. (F) said it will repurchase $1.8 billion of its shares to reduce dilution from recent stock grants to executives. The par amount per share for Ford ’s common stock is $0.01. Paid-in capital—excess of par is $5.39 per share on average. The market price was $16. Required: 1. Suppose Ford reacquires 112 million shares through repurchase on the open market at $16 per share. Prepare the appropriate journal entry to record the purchase. Ford considers the shares it buys back to be treasury stock. 2. Suppose Ford considers the shares it buys back to be retired rather than treated as treasury stock. Prepare the appropriate journal entry to record the purchase. 3. What does the company mean by saying that the buyback will serve “to offset dilution from executive compensation”?The Cheesecake Factory Incorporated (NASDAQ: CAKE) is publicly held and had morethan 93 million common shares outstanding as of the end of the 2016 fiscal year. The companyhas preferred stock authorized but did not have any preferred stock issued.During fiscal year 2016, The Cheesecake Factory declared and paid cash dividends of$0.88 per share, totaling approximately $42.3 million. During that same year, it purchased 2.9million shares of its own common stock at an approximate cost of $146.5 million.Requirements1. What impact, if any, would the cash dividend have had on The Cheesecake Factory’sassets, liabilities, and equity during 2016?2. What impact, if any, would the cash dividend have had on The Cheesecake Factory’srevenues and expenses during 2016?3. On which financial statement(s) would the cash dividends be listed for 2016?4. What impact, if any, would the purchase of the common stock have had on The CheesecakeFactory’s assets, liabilities, and equity during 2016?5. What impact,…
