In initial public stock offering (IPO) by a company’s rival can have significant impact on the profits of other public stocks in the sector, points out a new research report from two Yale University professors. IPO is bad news for rivals The paper points out that competitors can see long term profit drop of between 10 and 25 percent. “Overall, the model indicates that an IPO is generally bad news for rivals’ future profits per unit of market share,” wrote Yale University finance professors Matthew Spiegel and Heather Tookes. What happens is that when a rival company launches their IPO…
IPO Could Indicate Problems For Competition, Says Yale Study
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.