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Reasons for Shift in Stock Price

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Added on  2023-04-20

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This analysis focuses on two companies which performed very differently in the market once they traded for the first time in the London stock exchange. It highlights how the company stock performed on the first day after their respective IPOs were issued to the public.

Reasons for Shift in Stock Price

   Added on 2023-04-20

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Running Head: Reason for Shift in Stock Price 1
Reasons for Shift in Stock Price
Name
Affiliated Institute
Date
Reasons for Shift in Stock Price_1
Reasons for Shift in Stock Price 2
Reasons for Shift in Stock Price
Underpricing is a finance term used to describe a situation where a company prices its
shares too low for an initial public offer (Abidin, Reddy & Zhu, 2012). This analysis focuses on
two companies which performed very differently in the market once they traded for the first time
in the London stock exchange. It highlights how the company stock performed on the first day
after their respective IPOs were issued to the public. The analysis also explains the reason for the
stock price fluctuation using underpricing theory, the characteristics of the company, and other
factors that might have contributed to the fluctuation of prices.
Mind Gym is a company that deals with behavioral science. It is a global company
contracted by other companies to help increase workers output through their own proprietary
products. Mind Gym IPO was launched on 28th June 2018 at 8 am with an immediate rise in its
share price ("Mind Gym PLC - Admission to AIM and First Day of Dealings - Proactive
investors (UK)", 2019). The initial offer was 146 pence per share for 35 million shares. The
share price climbed by 25 percent to trade at 182.5 pence by 4 p.m. on the same day (Howard,
2019). The data and line chart below shows the movement of the share price when trades were
active.
8 a.m. 10 a.m. 12 p.m. 2 p.m. 4 p.m.
146p 165p 175p 177p 182.5p
Reasons for Shift in Stock Price_2
Reasons for Shift in Stock Price 3
8AM 10AM 12PM 2PM 4PM
143
148
153
158
163
168
173
178
183
146
165.2
175 177
182.5
Mind GYM PLC
As of June 28 2018 4p.m
Aston Martin, on the other hand, had a drop in share price when the company first traded
in the market. It is a luxury carmaker with a presence in the global market. The IPO was issued
on October 3rd 2018 at £19 per share but the price dropped once the trading began. It dropped by
as low as 4.7 percent and finally closing at £18.1 ("Bloomberg - Are you a robot?", 2019) . The
data and line chart below highlights how the stock price fluctuated when trades were active.
8 a.m. 10 a.m. 12 p.m. 2 p.m. 4 p.m.
£19 £18.5 £17.75 £17.79 £18.1
8AM 10AM 12PM 2PM 4PM
17
17.5
18
18.5
19
19.5
AML
As of October 3 2018 4pm
Reasons for Shift in Stock Price_3

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