Facebook, Inc.: The Initial Public Offering (A) Harvard Case Solution & Analysis

An analyst at CXTechnology Fund was preparing to speak to the lead underwriter about his closing interest in the deal. The analyst had reviewed its lucrative business model Facebook’s exceptional growth and the competitive landscape landscape for the social networking industry.

The IPO appeared to be oversubscribed with significant interest from institutional and retail investors alike, but the valuation seemed expensive by technology standards. A spreadsheet for pupils is accessible, product 7B12N031. Learning Objective: The case introduces advanced problems in corporate finance and both undergraduate and MBA students. Students are faced with a fast-growing, high-profile business from a new sector where the potential income prognosis is undecided.

Students must learn about the energetic IPO market, the incentive of distinct parties (company, insiders, underwriters, new investors) and their possible conflicting interests. It is difficult to create a valuation for Facebook’s shares despite having a third-party fundamental valuation and market multiples from both precedent transactions and comparable companies. Through the discussion, students learn that equity valuation is a science and an art. In addition they review the steps involved in a U.S. IPO.

Publication Date: 01/25/2013

This is just an excerpt. This case is about Finance

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Facebook, Inc.: The Initial Public Offering (A)

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