Question

Beyond Meat (ticker: BYND), makers of the Beyond Burger, raised funds in the capital markets via an initial public offering (IPO) conducted in May 2019 (To find out more, you can follow this embedded link.). The Beyond’s final IPO prospectus filed with the SEC showed that 9,625,000 shares common stock were sold at an offer price of $25 per share and with underwriting discounts and commissions of $1.75 per share.

Go to Yahoo Finance and find the first-day secondary-market closing price for Beyond Meat (BYND) on May 2, 2019. Under the Summary menu, you can find the closing price on May 2, 2019 by selecting Max for the chart and sliding your cursor to the fart left over the date May 2, 2019 (the date is shown in the black bar above your cursor and the corresponding closing price is shown in the black indicator on the right side of the chart). You can also find closing prices by using the Historical Data menu and selecting the time period and frequency (when using prices to calculate returns you generally want to use the adjusted closing price).

Find Beyond Meat’s final IPO prospectus dated May 1, 2019 by going to SEC.gov, FILINGS, Company Filing Search, Company and Person Lookup, Beyond Meat, Inc. (BYND). Look for filing type 424B4 with filing date 2019-05-03, then click on Documents, then click on “beyondmeat424b4.htm”.The first two sentences on the cover of the final prospectus should be “This is the initial public offering of shares of common stock of Beyond Meat, Inc. Prior to this offering, there has been no public market for our common stock.” Search the final prospectus for the term “Common stock to be outstanding after the offering” to determine the number of shares of common stock outstanding immediately following the IPO (excluding the underwriter’s option to purchase additional shares).

Questions:

5. Based on the information on the front page of the IPO final prospectus, how many investment banks are in the underwriting syndicate?

6. Calculate the underpricing for Beyond’s IPO.

7. Calculate Beyond’s market capitalization at the close of the first-day of second-market trading.

8. Calculate the money left on the table in Beyond’s IPO.

9. Share any thoughts you might have regarding Beyond’s IPO.

Answer 1

Question 1:

Based on the information on the front page of the IPO final prospectus. the number of investment banks in the underwriting syndicate are 6, namely, Goldman Sachs & Co. LLC, J.P. Morgan, Credit Suisse, BofA Merrill Lynch, Jefferies and William Blair.

Question 2:

Closing price of stock on first day of market trading = $65.75

Offer price = Po = $25 (Given)

Underpricing = [(Pm-Po)/Po]*100 = [(65.75-25)/25]*100 = 163%

Hence, underpricing for the IPO is 163%.

Question 3:

Closing price of stock on first day of market trading = $65.75

Number of shares outstanding = 58,308,044

Market capitalization = Closing price * Number of shares outstanding = $65.75 * 58,308,044 = $3,833,753,893.

Hence, Beyond's market capitalization at the close of the first-day of second-market trading.= $3,833,753,893.

Question 4:

Money left on the table = (Closing price on first day of trading - issue price) * (Number of shares issued) = ($65.75 - $25) * 9,625,000 = $392,218,750.

Hence, money left on the table in Beyond's IPO is $392,218,750.