Ipo Valuation Case
UVA-F-1415-SSRN v 1.2
JETBLUE AIRWAYS IPO VALUATION My neighbor called me the other day and she said, 'You have an interesting little boy. ' Turns out, the other day, she asked my son Daniel what he wanted for Christmas. And he said, 'I want some stock. ' 'Stock? ' she said. 'Don 't you want video games or anything? ' 'Nope, ' he said, 'I just want stock. JetBlue stock. ' --David Neeleman, CEO and Founder, JetBlue Airways It was the first week of April 2002, barely two years since the first freshly-painted JetBlue plane rolled out at the company’s home base at New York City’s John F. Kennedy (JFK) Airport. JetBlue’s first years had been good ones. Despite the challenges facing the U.S. airline industry following the aircraft terrorist attacks of September 2001, the company remained profitable and was growing aggressively. To support their growth trajectory and offset portfolio losses by their venture capital investors, management had accelerated the decision to raise additional capital through a public equity offering. Exhibits 1 through 4 provides selections from JetBlue’s initial public offering (IPO) prospectus, the name for the document required by the SEC to inform investors about the details of the equity offering. With less than a week to go until the offering, JetBlue management was preparing for a meeting with IPO co-lead manager, Morgan Stanley. The initial price range for JetBlue shares had originally been targeted at between $22 to $24. Facing sizeable excess demand for the 5.5 million shares planned in the IPO, the JetBlue management team was considering whether to support an increase in the offering price of the new shares.
This case was prepared by Professor Michael J. Schill with research assistance from Cheng Cui. This case was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright 2003 by the University of Virginia Darden School Foundation,
JETBLUE AIRWAYS IPO VALUATION My neighbor called me the other day and she said, 'You have an interesting little boy. ' Turns out, the other day, she asked my son Daniel what he wanted for Christmas. And he said, 'I want some stock. ' 'Stock? ' she said. 'Don 't you want video games or anything? ' 'Nope, ' he said, 'I just want stock. JetBlue stock. ' --David Neeleman, CEO and Founder, JetBlue Airways It was the first week of April 2002, barely two years since the first freshly-painted JetBlue plane rolled out at the company’s home base at New York City’s John F. Kennedy (JFK) Airport. JetBlue’s first years had been good ones. Despite the challenges facing the U.S. airline industry following the aircraft terrorist attacks of September 2001, the company remained profitable and was growing aggressively. To support their growth trajectory and offset portfolio losses by their venture capital investors, management had accelerated the decision to raise additional capital through a public equity offering. Exhibits 1 through 4 provides selections from JetBlue’s initial public offering (IPO) prospectus, the name for the document required by the SEC to inform investors about the details of the equity offering. With less than a week to go until the offering, JetBlue management was preparing for a meeting with IPO co-lead manager, Morgan Stanley. The initial price range for JetBlue shares had originally been targeted at between $22 to $24. Facing sizeable excess demand for the 5.5 million shares planned in the IPO, the JetBlue management team was considering whether to support an increase in the offering price of the new shares.
This case was prepared by Professor Michael J. Schill with research assistance from Cheng Cui. This case was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright 2003 by the University of Virginia Darden School Foundation,