Final Word from Monday, May 21, 2012



Facebook is coming off a very successful IPO, even if the underwriters had to step in to prevent the stock from falling below the issue price. Investors who bought shares can now only hope that Facebook turns out like Google (up 400% since its IPO) or LinkedIn (up 20%), and not like Grupon (down 50%). Or like any of the IPOs on the Prague Stock Exchange. The last IPO in Prague was Fortuna, and it also happens to be the one holding up the best. It has only lost 9.2% of its value. From there, it's all downhill. Shares in Pegas Nonwovens have lost 43.1%; KIT Digital is down 62.0% since the IPO; AAA Auto is down 66.1%; NWR has lost 75.0%; Orco has lost 95.0%; and ECM is down 98.1%. By our count, investors have lost a total Kč 123.8bn on these IPOs. Or the optimistic way to look at it is that the Prague IPOs allowed the issuers to get out at just the right time. Just like in the case of Facebook.[Czech Republic initial public offering]

Glossary of difficult words

IPO - initial public offering (stock issue);

to come off - (of an action) to succeed;

underwriter - to engage to buy all the unsold shares in an issue of new securities;

to hold up - to remain strong or vigorous;

downhill - leading to a steadily worsening situation.

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