Use the following information to answer the next three questions. Zipcar, the car sharing company, went public in April 2011. Assisted by the investment bank Goldman, Sachs & Co., Zipcar sold 9.68 million shares at $18 each, thereby raising a total of $174.24 million. By the end of the first day of trading, the stock had zipped to $28 per share, down from a high of $31.50. Based on the end-of-day numbers, Zipcar shares were apparently underpriced by about $10 each, meaning that the company missed out on an additional $96.8 million.

1. The Zipcar IPO was underpriced by about 56 percent. Should Zipcar be upset at Goldman over the underpricing?

2. In the previous question, how would it affect your thinking to know that the company was incorporated about 10 years earlier, had only $186 million in revenues in 2010, and had never earned a profit? Additionally, the viability of the companys business model was still unproven.

3. In the previous two questions, how would it affect your thinking to know that in addition to the 9.68 million shares offered in the IPO, Zipcar had an additional 30 million shares outstanding? Of those 30 million shares, 14.1 million shares were owned by four venture capital firms, and 15.5 million shares were owned by the 12 directors and executive officers.