30.03.2023 - 16:09

The Netscape IPO was severely under priced. This occurred even though the offering price of $28 had already been doubled from a planned $14 just weeks earlier. Should Netscape be upset with Morgan Stanley over the remaining underpricing?

The Netscape IPO was severely under priced. This occurred even though the offering price of $28 had already been doubled from a planned $14 just weeks earlier. Should Netscape be upset with Morgan Stanley over the remaining underpricing?

Answers (1)
  • Dj-Dee
    April 10, 2023 в 10:03

    The underpricing of an initial public offering (IPO) can have significant financial implications for the company going public, as well as for the underwriting investment bank. In the case of Netscape, the IPO was severely underpriced, even though the offering price of $28 had already been doubled from a planned $14 just weeks earlier.

    It is reasonable for Netscape to feel upset about the underpricing of its IPO, as the company could have potentially raised more capital had the shares been priced higher. However, it is important to note that the investment bank, in this case, Morgan Stanley, is responsible for determining the IPO price based on market conditions and investor demand. It is also possible that Morgan Stanley may have intentionally underpriced the offering to create a "pop" in the stock price on the first day of trading, which could generate positive publicity and investor interest in the company.

    Ultimately, while Netscape may have legitimate reasons to feel upset about the underpricing of its IPO, it is difficult to assign blame solely to Morgan Stanley, as determining the appropriate IPO price is a complex process that involves numerous factors and considerations.

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