The IPO Buzz: Bankers and Bargains

The Grand Canyon Story
Grand Canyon, a Phoenix-based provider of online postsecondary education services, priced 10.5 million shares at $12 each, down from an initial filing price of $18 to $20 per share. The IPO started trading at $10 and closed its opening day at $11.85.
In conclusion, to get the deal out the door, its price had to be slashed — and it still opened sharply below its offering price.
The Message
Now here’s the message from your friendly investment bankers. Only solid companies with glowing numbers, which are priced at bargain levels – like Grand Canyon – will attract investors in today’s markets.
The Aftermarket
And here’s what happened to Grand Canyon in the aftermarket. On Friday, Dec. 19, it closed at $16.74 per share — UP 39.5 percent from its initial offering price and UP 67.4 percent from its opening price.
(Check: View all IPOs priced in 2008, also found on home page just below 2008 IPO Scorecard.)
And Now for the Numbers
Here they are: For the nine months ending Sept. 30, 2008, Grand Canyon reported net income of $4.5 million on sales of $109.6 million compared with net income of $521,000 on sales of $68.5 million for the same period a year ago. The company has been around for nearly 60 years. It was founded in 1949 now has about 1,121 employees.
Enough said?
Fortunately, stock markets are cyclical.
Downturns don’t last forever. And when the stock market does turn up, there will be many IPOs being offered at discounted prices.
The Grand Canyon IPO was not an isolated deal. So stay tuned.
Note: The IPO Buzz will not be published next week.