Question: Having a successful IPO (initial public offering) of company stock depends on accurately determining the companys value and correctly assessing economic and market conditions. For this discussion, I have researched an IPO that occurred in the last five years and present my assessment of whether I think the offering was a success.

Answer:

Streaming software and device manufacturer Roku Inc. priced its initial public offering at $14. The stock began trading September 28, 2017 on the NASDAQ exchange under the ticker ROKU, and shares gained as much as 30 percent in initial trading.

Roku raised $219 million and gave the company a valuation of $1.3 billion (Tech roars back Roku IPO up 68%, 2017). Roku sold an additional, 9 million shares for $126 million, while early investor Menlo Ventures sold 6 million shares for $84 million and Sky Ventures Ltd. sold 668,000 shares for $9 million. Underwriting banks have access to another 2.35 million shares that they could sell in the offering (Cherney, 2017). This indicates Roku was valued correctly and was a success to shareholders who saw a 68 percent increase of share prices within 24 hours of the IPO. Currently as of today, Roku is trading at $64 dollars, a significant increase from their IPO.

Roku attributes their success to a market opportunity and belief that all television content would and will be available via streaming. According to Activate, a high-tech, media and consumer consultancy firm (2015), it is projected that the average daily video consumption will increase to over 7 hours in 2018, 34% of which is attributed to digital video content, from 6.5 hours in 2013, 18% of which was attributed to digital video content. Further, the number of traditional pay TV subscribers continues to decline as consumers increasingly favor a streaming experience.

I believe that Rokus IPO based on my analysis was a success. Rokus share price closed by an increase of 68%, above its IPO price on volume of 39.3 million shares. It was the biggest debut for a large IPO at that point in time of 2017.

For Chegg: explain whether you agree or disagree with the above assessments of my Selected IPO that occurred in the last five years. Can you identify additional economic and market factors that may have influenced the results of the IPO?