Question

Initial public offering  On April​ 13, 2017 ​, Yext Inc. completed its IPO on the NYSE. Yext sold shares 10,500,000 of stock at an offer price of ​$10 with an underwriting discount of ​$0.78 per share.​ Yext's closing stock price on the first day of trading on the secondary market was ​$13.45​, and 85,489,470 shares were outstanding.

e. Calculate​ Yext's IPO underpricing.

f. Calculate​ Yext's market capitalization.

Answer 1

We know that:

e.) Underpricing per share is the difference between market price per share and offer price per share

Yext's IPO underpricing per share= Closing stock price on the first day of trading - Offer Price

Yext's IPO underpricing per share = $13.45 - $10 = $3.45

Yext's IPO underpricing = Underpricing per share x No. of shares sold on IPO

Yext's IPO underpricing = $3.45 x 10,500,000 = $36,225,000

f.) Yext's Market capitalization = No. of Outstanding shares x Closing stock price on the first day of trading

Yext's Market capitalization = 85,489,470 x $13.45 = $1,149,833,371.50