Question

The company WayABC went public last year with its initial public offering price at $29, but...

The company WayABC went public last year with its initial public offering price at $29, but its first day trading price was $25. Did investors like its IPO, and why did the firm attempt to price its initial stocks?

Homework Answers

Answer #1

Investors did not like its IPO because first day trading price of $25 is less than offer price of $29.

the firm attempted to price its initial stocks because before going public, this company was a private company. stock of private companies are not listed on stock exchnages and they don't have to make their financial statments public. so, only they know what was and is their past and current performance. only they know what will be their future performance based on their future planning and strategies. publice have very little or know information about private companies.

so, they price their initial stock for public based on what information they have about their business operations in the future.

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