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Low-Priced IPO

Don’t be Surprised by Uber’s Low-Priced IPO

Uber, the ridesharing service entered the public markets with its low-priced IPO.

According to Yale SOM’s Matthew Spiegel and Heather Tookes, an IPO is often followed by disappointing returns, not just for the newly public company but its entire industry. Their study found that industry performance declines because IPOs tend to occur when once-loyal customers become easier to steal. The lackluster performance of low-priced IPOs shouldn’t be overly concerning, but it is also noticed that entire industries see their values and profitability decline following the typical IPO.

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