Case Solution for Rosetta Stone: Pricing the 2009 IPO

Complete Case details are given below :

Case Name :      Rosetta Stone: Pricing the 2009 IPO
Authors :           Michael J. Schill, Suprajj Papireddy
Source :             Darden School of Business
Case ID :           UV3930
Discipline :        Finance
Case Length :    23 pages
Solution Sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
This case examines the April 2009 decision of Rosetta Stone management to price the initial public offering of Rosetta Stone stock during one of the most difficult periods in capital-raising history. The case outlines Rosetta Stone’s unique language learning strategy and the associated strong financial performance. Students are invited to value the stock and take a position on whether the current $15 to $17 per share filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. The epilogue details the 40% first-day rise in Rosetta Stone stock from the $18 offer price. With such a backdrop, students are exposed to one of the well-known finance anomalies-the IPO underpricing phenomenon-and are invited to critically discuss various proposed explanations.
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