Google IPO

Case Study Presentation

Made By:-
Rohit Jain
Ayush Gupta
Shivas Sahni
 IPO Dutch Auction: Innovation
in IPO Pricing
Dutch Auction is an auction method that uses a bidding
process to find an optimal market price for the stock, the
lowest price at which an issuing company can sell all the
available shares. An alternative to the traditional negotiated
pricing process used by underwriters to set IPO prices, this
auction format was employed by Google and is used for US
Treasury auctions.

2
 Dutch Auction
• Overview of Dutch (Reverse) Auction Process

- Company determines amount of stock and price range

- Buyers place bids and price goes down until stock is sold

• Goals of Dutch Auction

- Open up offering to Individual investors
- Lower fees paid to Investment Banks
- Reduce volatility
- Google saw themselves at the frontier of technology
 Dutch Auction
• Snapshot at Google’s IPO
- 25.7 M shares originally priced at $108-135/share
- Actual IPO priced 19.6 M shares at $85-95/share
-Turned out to be the 25th largest IPO
- Google used the "Dutch Auction method" to sell its
shares because it felt that
under the conventional IPO method, most small investors
would be unable to invest and the IPO would get limited to
some large institutions, investment bankers, and their clients.
 April 29 July 30 Aug. 12 13 Aug. 17

Filed IPO Registration Period

Auction Period
Excitement for potential to Skepticism; technical issues
reinvigorate the tech-market (too expensive & cumbersome)

Aug. 19 Oct. 12

Trade Begin Last Trade 136.66

1st Day Nasdaq Trading
$85 ⇒ 　 $100.34 +18%
 Was the IPO successful?
Achieved primary purpose of an IPO.

• Raised $1.4 billion

- more than any other tech company since 2000

• Gave stock valuation of $23 billion

- more than double the market value of Sears
- worth more than AT&T corp., Xerox Corp. and
RadioShack Corp. combined.
Oct. 12, 2004: Last Trade 136.66
Traditional Method Vs Dutch Option