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jetblue

jetblue

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Published by Marufjweel Khan

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Published by: Marufjweel Khan on Mar 13, 2011
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03/06/2013

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JETBLUE AIRWAYS IPO VALUATION

Mustapha: 0538369 Godana: 0722941 Muzzammir:0712049

INTRODUCTION: JetBlue was profitable growing aggressively despite challenges facing the U.S airline industry after 9/11 Company chooses to go public Underwriters include Morgan stanley Initial price range $22-$24 Facing sizeable excess demand for the 5.5 million shares planed Increase offering price range to $25-$26 .

rapidly growing companies that either require additional capital to continue expanding or have met a milestone for going public that was established in a contract signed earlier in order to obtain venture capital funding. IPO·s are typically made by small. It is a big deal as it has many procedures to follow: Obtain approval of current shareholders Company·s auditors must certify that all documents for the company are legitimate Finding an investment bank willing to promote and facilitate the sale of the company·s IPO shares (underwriters) .1A. WHAT IS AN IPO & WHY IS IT SUCH A BIG DEAL?    An IPO means the first public sale of a firm·s stock.

SEC must approve the offering  Sales of shares made by the underwriters. giving a preliminary version of the prospectus to prospective investors (red herring)  After the SEC approves the registration statement.File registration statement with SEC. the investment community can begin analyzing the company·s prospects  After at least one month IPO is complete.  The investment bankers and company executives promote the company·s stock offering and try measure the demand for the offering and set an expected price range.  After underwriters set terms and price issues. the company must observe a quiet period. during which there are restrictions on what the company officials may say about the company.  .

IS THIS A GOOD DEAL FOR JETBLUE? Yes.1B. as they wanted to support their growth trajectory and offset portfolio losses by their venture capital investors. .

21% .2.ESTIMATE JETBLUE AIRWAYS COST OF CAPITAL WACC = Kd (1-t) * Wd + Kp*Wp + Ke* We =9.

Assumptions include: y Tax rate of 34% y Inflation rate of 4% throughout . we don·t think the forecast is reasonable because there are some key assumptions made.3.DOES FINANCIAL FORECAST IN THE CASE SEEM REASONABLE? WHAT ARE THE KEY ASSUMPTIONS? No.

4.WHAT DO YOU THINK JETBLUE STOCK IS WORTH? .

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