Finc 667: “the Role of Capital Markets in the Dot Com Crash of 2000” – Volatility in Market Value
Autor: Mikki • May 7, 2018 • 888 Words (4 Pages) • 781 Views
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Scient reach profitability and stock price reached its peak at $133.75 per share by March of 2000 (after a 2-1 split) and increase of 1238% from its initial IPO price of $10 per share.
Scient stock price fell to $44 per share by June due to the re-evaluation of the industry.
By September 2000 the e-business industry experience a change (dot.com crisis).
Larger companies no longer felt that there was competition from smaller ones
By December Scient lower their revenue and earnings expectations. In addition, the lower 20% of their workforce.
By January 2001 Scient stock fell to $3.44
By February 2001 Scient stock fell to $2.94
Financial strengths in 2000
The new capital increase the company’s potential for growth financing:
- Expansion into the market
- Finance a promising acquisitions
- Provides wealth for the company owners
- Scient reach profitability and stock price reached its peak at $133.75 per share by March of 2000 (after a 2-1 split) and increase of 1238% from its initial IPO price of $10 per share.
- Can enhance market credibility & competitive advantage
- Helps attract & retain employees
Financial Weaknesses in 2000
- Competition among top companies
- Re-evaluation of e-business industry decrease stock prices
- Higher compensation cost to retain employees
- Lower Workforce 20% decrease
- Increasing Net Loss
- A high working capital ratio isn't always a good thing, it could indicate that they have too much inventory or they are not investing their excess cash.
Fluctuations
In the yr 2000 The financial performance in 2000 helps illustrate how Scients performance was due to the speed on which companies were penetrating the market. Scient took advantage of this movement by selling large blocks of shares and their stocks reached amazing performance, therefore, illustrating a huge fluctuation of their stocks from 1999 to 2000. Scient sold large stocks However, due to the re-evaluation of the industry its performance suffer a great loss with stocks reaching $3.44 price per share by January 2001.
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