Google's Unconventional IPO: A New Path for High-Tech Offerings?

Strategic Insights -

Google's initial public offering was a significant event that shook the financial world. The search engine giant's unconventional auction process, which allowed everyone to participate, raised $1.67 billion, more than three times the amount raised by Microsoft in its 1986 IPO. Despite some concerns, the offering was a success, and the stock price rose by 18% on the first day of trading and by 27% by the end of the week. Google's move away from traditional IPO practices may set a new standard for high-tech offerings, but it also raises questions about the role of Wall Street and the SEC.

Key Takeaways:

  • Google's IPO was significantly larger than previous high-tech offerings, with a total of $1.67 billion raised, compared to $470 million raised by six other high-profile technology companies.
  • The offering price of Google's IPO valued the company at 10 times revenues and 85 times earnings, compared to 16 times earnings for Microsoft in 1986.
  • The size of Google's market capitalization, at $29.7 billion, will make it difficult for the company to justify its growth over the coming years.
  • The unconventional auction process of Google's IPO may persuade other companies to adopt similar practices, but it also raises concerns about the ability of investors to participate in the offering.
  • The SEC is investigating Google's IPO, including a possible civil fraud suit against the company's general counsel.
  • The first-day performance and two-day volume of Google's IPO were not as extreme as those seen in the late 1990s, but were still significant, with a two-day volume of 172% of the shares sold.

Statistics:

  • Google's IPO raised $1.67 billion, more than three times the amount raised by six other high-profile technology companies combined.
  • The offering price of Google's IPO valued the company at 10 times revenues and 85 times earnings.
  • Google's market capitalization is $29.7 billion, making it difficult for the company to justify its growth over the coming years.
  • The first-day performance of Google's IPO was an 18% increase, and by the end of the week, the stock price had risen by 27%.
  • The two-day volume of Google's IPO was 172% of the shares sold.
  • The six other high-tech IPOs mentioned in the article raised a combined total of $470 million.

Sources:

  • Bloomberg Financial Markets: "Hot Technology Offerings" chart
  • Microsoft IPO (March 13, 1986)
  • AOL IPO (March 19, 1992)
  • Netscape IPO (Aug. 9, 1995)
  • Yahoo IPO (April 12, 1996)
  • Amazon.com IPO (May 15, 1997)
  • Priceline.com IPO (March 30, 1999)
  • Google IPO (Aug. 18, 2000)