Ipo Valuation Essay

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Case study 1: JetBlue airway IPO valuation JetBlue, found in 1999 by David Neeleman, focused on offering low-fare airline, which is an intensive capital and high risk industry. JetBlue airways was considered going public through Initial Public Offering (IPO) in effort to raise additional capital. In order to determine the appropriate offering share price, it was essential to go through IPO evaluation process by looking at both current and future company finance position, low-fare airline and main players’ performance. The case study issue is finalize the suitable JetBlue’s offering price range to come up with oversubscribed by investors while pursuing company long-term reward strategy. Going public Going public through IPO is the process of selling the ownership of firm to public shareholders for the first time (Bodie, Kane & Marcus 2014). IPO might consider being a big deal as it involves both benefits and costs. The most significant advantage of going public is financial reward in terms of raising capital funds for growth as it will offer wider range of finance source via public market. Those funds can be used in company development projects, operation business routines and others obligation liabilities. Another primary benefit of going public is the increase in liquidity for owners, investors, and institution. The decision of going public creates public market for company stock, means that it is easier to trade stock either at the time of IPO or later on at the stock market. In addition, issuing share to public might improve company’s financial status and creditability. Thereby, it increases equity base and leverage capacity that allows the firm to borrow future additional fund to obtain optimal capital structure. Good creditability is also helpful in terms of negotiate better debt term. Furthermore, company’s visibility and prestige are enhanced as

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