11/16/22, 6:04 AM Topic: Week 4 - Discussion Forum 2

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due Nov 17

Week 4 - Discussion Forum 2 4 4

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Raising Capital [WLO: 2] [CLOs: 1, 3, 4] Twitter

Prior to beginning work on this discussion These Twitter feeds are being provided as supplemental
forum, read Chapter 15 in the Foundations of information and as a way to stay up-to-date on any
Financial Management textbook. current events happening in the field. Be sure to meet
all the discussion question requirements and use these
Initial Response:
feeds for any additional information only.
For this discussion forum,
@markets
Compare the advantages and
disadvantages of using a Dutch Auction to
a traditional underwriting method for an
IPO.
Identify one real-life IPO that occurred in
2020. Try to select a company that a fellow
student has not already selected.
For this one IPO, determine the following:
The initial price
The stock price at the end of the first
day of trading
The stock price at the end of 10 days of
trading
The stock price at the end of 30 days of
trading
State the following in your post:

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11/16/22, 6:04 AM Topic: Week 4 - Discussion Forum 2

The total amount of the offering

The number of shares offered markets
The underwriter
The fees for the IPO
Evaluate the success of this IPO from the Bloomberg Markets @markets
perspective of the issuer; the underwriter, Globally, less than 1% of clothes tossed a
and investors. recycled into new ones. From Ghana to In
@Ekowmoses and… https://t.co/HmTQC

Your initial response should be a minimum of

200 words. Graduate school students need to
Bloomberg Markets @markets
learn how to assess the perspectives of
RT @BBGNewEconomy: NEF Latest: “Th
several scholars. Support your response with
has changed completely.”
Neil Shen, foun
at least one scholarly and/or credible resource managing partner of Sequoia Capital Chi
in addition to the text. says…

Guided Response: Respond to at least two of

your fellow students’ or instructor posts in a Bloomberg Markets @markets
substantive manner and provide information or
concepts that they may not have considered.
@DaveRamsey
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11/16/22, 6:04 AM Topic: Week 4 - Discussion Forum 2

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Nov 8, 2022

Class,

Discussion 4-2: Raising Capital

Prior to beginning work on this discussion forum, read Chapter 15 in the Foundations of

Financial Management textbook.

Initial Response:

For this discussion forum,

Compare the advantages and disadvantages of using a Dutch Auction to a traditional

underwriting method for an IPO.
Identify one real-life IPO that occurred in 2020. Try to select a company that a fellow
student has not already selected.
For this one IPO, determine the following:
The initial price
The stock price at the end of the first day of trading
The stock price at the end of 10 days of trading
The stock price at the end of 30 days of trading
State the following in your post:
The total amount of the offering
The number of shares offered
The underwriter
The fees for the IPO
Evaluate the success of this IPO from the perspective of the issuer; the underwriter, and
investors.

Your initial response should be a minimum of 200 words. Graduate school students need to
learn how to assess the perspectives of several scholars. Support your response with at least
one scholarly and/or credible resource in addition to the text.

Dr. V.

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11/16/22, 6:04 AM Topic: Week 4 - Discussion Forum 2

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(https:// Kristin Ashby 

(https://ashford.instructure.com/courses/109439/users/271460)
Yesterday

Dutch auctions sell the volume at the highest possible prices for the IPO. the auctioneer takes
bids and then sells from at the lowest price of the successful bids. During an IPO, a company
offers a set number of shares and the preferred pricing (Block, 2022) . Shareholders then bid
on the stock based on the buyer's estimated pricing rather than the standard underwriter-
determined pricing. While auctions allow buyers to set the price, the IPO has no control over
the selling price of the shares. Dutch auctions ensure all the share prices are set where buyers
are willing to pay. Yet, the IPO may not raise funds expected during an initial offering. Using
the traditional underwriting method, the company is assured that the price set by the
underwriters will generate the expected funding or better.  

2020 saw a considerable increase in IPO activity over 2019, even as COVID hit. Medical
equipment company, Inari, has thrived during and post-pandemic. The company offers
minimally invasive treatments for removing blood clots in the veins. Blood clots are a primary
risk of the covid-19 leading to an increased risk of heart attacks and strokes. Studies even
show that the threat continues long after a COVID recovery.   

As the most successful IPO for 2020, Inari Medical sits at 318.05% return to date (Stock
Analysis, n.d.). Bank of America Securities, Morgan Stanley, Wells Fargo Securities, and
Canaccord Genuity were the underwriters who set the IPO price at $19.00 before the first day
of market trading (Jones, D., 2020). It is only available for institutional investors pre-market.
The first trading day saw the stock open at $41.30 and close a little ahead at $42.51. By day
ten on June 2, ten short days later, the stock opened at $63.89, closing at $67.45. Interest
continued strong into the 30 and 90 days markets, with June 22 closing at 63.26 and August
22 closing at $70.43 (Yahoo Finance, n.d.) Inari stock remains strong three years post-IPO.

Block, S. (2022). Foundations of Financial Management (18th ed.). McGraw-Hill Higher

Education (US). https://uaglobalcampus.vitalsource.com/books/9781266040917

(https://uaglobalcampus.vitalsource.com/books/9781266040917)

Inari Medical. (2020, May 21). Inari Medical announces pricing of its upsized initial public
offering. Globenewswire. https://www.globenewswire.com/news-

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11/16/22, 6:04 AM Topic: Week 4 - Discussion Forum 2

release/2020/05/22/2037385/0/en/Inari-Medical-Announces-Pricing-of-Its-Upsized-Initial-
Public-Offering.html

Jones, D. (2020, May 18). IPO launch: Inari Medical prepares for $110 million IPO. The Street.
https://www.thestreet.com/ipo/news/inari-medical-ipo-launch#:~:text=Listed%20underwriters
%20of%20the%20IPO,Fargo%20Securities%2C%20and%20Canaccord%20Genuity.

Stock Analysis. (n.d.) All 2020 IPOs. https://stockanalysis.com/ipos/2020/

Yahoo. (n.d.) Inari Medical. https://finance.yahoo.com/quote/NARI/history?

period1=1590192000&period2=1599955200&interval=1d&filter=history&frequency=1d&includ
eAdjustedClose=true

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(https:// Warren Salley 

(https://ashford.instructure.com/courses/109439/users/245198)
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Hello class,

In the traditional underwriting method for an IPO offering the underwriter determines the price
of the shares. The underwriters set the parameters for the evaluations while consulting with
potential investors to decide on the IPO pricing. On the flip side, the Dutch auction helps the
corporation to find the right price for its shares (Block et al, 2022). The Dutch auction method
gives less control to the investor resulting in inappropriate share pricing and increased risks.

Bullfrog AI Holdings uses artificial intelligence and machine learning to advance medicines for
both internal and external projects. The global market growth for AI was at an estimated $1.15
billion with an estimated forecast to reach $11.9 billion. Bullfrog is seeking to raise investment
capital of $8.4 million from 1.3 million of common stock in its IPO offering. The proposed price
of each share will be $6.375. WallachBeth Capital is the underwriter for the IPO offering
(Bullfrog AI Holdings, n.d.). The future projected growth of this company in the AI industry is
promising with consistent growth through 2030.

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11/16/22, 6:04 AM Topic: Week 4 - Discussion Forum 2

Warren

Resources

Block, S. B., Hirt, G. A., & Danielsen, B. R. (2022). Foundations of financial management (18th
ed.). McGraw-Hill Higher Education.

Stock Analysis. (n.d.). Bullfrog AI Holdings, Inc. (BFAI). Retrieved from:

https://stockanalysis.com/stocks/bfai/
(https://stockanalysis.com/stocks/bfai/)

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(https:// Wendy Moore 

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Yesterday

Compare the advantages and disadvantages of using a Dutch Auction to a traditional

underwriting method for an IPO.

The key difference between Dutch auctions and Open IPOs is that Dutch auctions sell shares
progressively, starting with the highest bid and descending until all stocks are sold, whereas
an Open IPO uses the same bidding methodology but sells all of the stocks at the lowest bid
price, such that all bidders pay the same amount (Glenn, 2022).  Dutch auctions are closed
events, while open IPOs are open to retail investors. 

Identify one real-life IPO that occurred in 2020.

An IPO that occurred in 2020 would be Door Dash (Dash); they opened on December 9, 2020,
at 182.00 and closed at 189.51.  At the end of 10 days (December 22, 2020) of trading, they
closed at 156.79, and at the end of 30 days (January 25, 2021), they closed at 191.81.

The pricing of its initial public offering of its Class A common stock at a price of $102.00 per
share. DoorDash is offering 33,000,000 shares of its Class A common stock. Goldman Sachs
& Co. LLC and J.P. Morgan were the underwriters.

References

Block, S. B., Hirt, G. A., & Danielsen, B. R. (2022). Foundations of financial management (18th

ed.). McGraw-Hill Higher Education.

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11/16/22, 6:04 AM Topic: Week 4 - Discussion Forum 2

Doordash. (2020) DoorDash Announces Pricing of Initial Public Offering. Retrieved from:
https://www.prnewswire.com/news-releases/doordash-announces-pricing-of-initial-public-
offering-301188949.html#:~:text=
(%22DoorDash%22)%20today%20announced,its%20Class%20A%20common%20stock.

Glenn, N. (2022). Dutch Auction vs Open IPO: Key Differences & Which is Better for Your
Company. Retrieved from: https://analystanswers.com/dutch-auction-vs-open-ipo-key-
differences-which-is-better-for-your-
company/#:~:text=The%20key%20difference%20between%20Dutch,all%20bidders%20p
ay%20the%20same
(https://analystanswers.com/dutch-auction-vs-open-ipo-key-differences-
which-is-better-for-your-
company/#:~:text=The%20key%20difference%20between%20Dutch,all%20bidders%20pay%20the
%20same)

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