Rosetta

4224 words 17 pages
Show More
ROSETTA STONE: pricing the 2009 IPO Teaching Note

This case examines the April 2009 decision of Rosetta Stone management to price the initial public offering of Rosetta Stone stock during one of the most difficult periods in capital-raising history. The case outlines Rosetta Stone’s unique language-learning strategy and its associated strong financial performance. Students are invited to value the stock and take a position on whether the current $15 to $17 per share filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. The epilogue details the 40% first-day rise in Rosetta Stone stock from the $18 offer price. With this …show more content…

This question invites students to explore the Rosetta Stone business model, its competitive strengths, and its potential to sustain a strong growth and profitability trajectory. Case Exhibit 6 can be a useful exhibit in highlighting the financial performance of the business. Typically students agree that Rosetta Stone is a very interesting business with strong potential for investors to participate in attractive financial upside potential.

3. What do you think the current market price is for Rosetta Stone shares?

Poll the class for their best-guess estimates of the market price of Rosetta Stone shares. Ask for an explanation for the variation in estimates. Draw out the observation that there is a substantial amount of uncertainty with valuing start-up businesses. The variation in class estimates is likely due to differences in judgment across the class as well as some possible technical errors in the valuations. Emphasize that, although there are no doubt many sound estimates, there are also substantial opportunities for error. An important objective of the discussion is to identify the sources of variation. Briefly review on the board the different parameters used by representative students in a discounted cash flow-based and a market multiples-based valuation.

4. The market-multiples approach seems easy. What are the pros and cons of using a market-multiples approach in valuation?

Have one of the students highlight the mechanics of a

Related

  • Rosetta Stone Ipo
    4809 words | 20 pages

    common reason CFOs choose to provide an IPO on their firm is to create public shares for use in future acquisitions. While Rosetta Stone may not have immediate acquisition plans, the public offering of their shares will provide new capital for them to continue to expand. Only 5% of their revenue comes from outside of the United States, and with increased capital from an IPO, Rosetta Stone can look to pursue new markets (Schill, 2009). Whether they plan to increase their market share through internal….

    Show More
  • Rosetta Stone: Pricing the 2009 Ipo
    1728 words | 7 pages

    Rosetta Stone: Pricing the 2009 IPO In the following case study we intend to analyse Rosetta Stone’s 2009 IPO. The main purpose is to come up with a reasonable estimate of the price at which the firm’s shares should be initially offered. This estimation is preceded by a general consideration of the advantages and disadvantages that going public might have for Rosetta Stone. Following this qualitative analysis, we then estimated the price at which Rosetta Stone’s shares should be offered in the….

    Show More
  • Sexual Harassment Case Study
    1198 words | 5 pages

    a case of sexual harassment because; the words and actions of fellow employees ultimately made Rosetta quit her job. The technical definition of harassment is when members of an organization treat an employee in a different manner due to that person’s sex, race, religion, age, and etc. Harassment also includes unwelcomed remarks or jokes which make the employee feel uncomfortable. These guys that Rosetta had been working with, as she mentioned were making remarks and asking uncomfortable questions….

    Show More
  • Rossetta Inc
    1351 words | 6 pages

    Current Situation A. Current Performance Proactive and aggressive potential for profit about Rosetta stone's growth, the language – learning industry produced over 83$ billion in consumer spending. From 2004 to 2009, Rosetta Stone’s revenue increased from $25.4 million to $252.3 million, representing a 58% compound annual growth rate B strategic posture 1. Misson Rosetta Stone’s mission was to change the way people learn languages. The company blended language learning….

    Show More
  • Cobb Museum
    1341 words | 6 pages

    This language was used for everyday writings. The final section of the Rosetta Stone was written in Greek. Egyptian rulers used the Greek language at that point in history (http://www.ancientegypt.co.uk/writing/rosetta.html). Even though the Rosetta Stone in the Cobb Museum is a replica, I still understand its significance to archeology and history. The New World Collection also had some interesting pieces….

    Show More
  • Analysis on Merck
    1289 words | 6 pages

    and managing cared formularities. Merck collaborated with the Worldwide Licensing Group in 2000. Ray Gilmartin then integrated the group within MRL and appointed Dr. Ben Shapiro, a senior MRL employee, as head. In 2001, Merck once again acquired Rosetta Inpharmatics, a leading gene expression and biological analysis organization for $620 million dollars. This opportunity is a must for Merck because other competitors will look at ways to increase their performance and become the top pharmaceutical….

    Show More
  • 1Case Study And Treatment Recommendations
    2517 words | 11 pages

    Case Study and Treatment Recommendations Evonne Moore Liberty University NAME: Rosa Lee Cunningham DOB/AGE: October 7th, 1936—52 DATE OF INTERVIEW: 04- 05-2015 EVALUATOR: Evonne Moore REASON FOR ASSESSMENT: Rosa Lee Cunningham is a 52 year old African American women with an addiction of heroin. Rosa Lee grew up in poverty. Her mother and father were sharecroppers who had migrated to the city. Rosa Lee had eight children, six boys and two girls. She was 14 years old when she had her….

    Show More

Popular Essays