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, Twitter is 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?

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, Twitter is 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?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 4TP: On November 7, 2013, Twitter released its initial public offering (IPO) priced at $26 per share....

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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?
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Publishing recently completed its IPO. The stock was offered at $14.76 per share. On the first day of trading, the stock closed at $18.33 per share. a. What was the initial return on Felton? b. Who benefited from this underpricing? Who lost, and why?
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