The Wisconsin MBA Graduate Finance Organization (GFO) recently sponsored a contest asking organization members to predict the closing price of Spotify on the first day of trading April 3, 2018. Without a sponsoring investment bank to prop up the IPO price in the first few hours of trading, this caused uncertainty on where the price would close. The IPO contest was a fun way to help GFO members learn about initial public offerings and determine a valuation by researching Spotify without the help of an opening price.
“There was a broad range in predictions, ranging from $29 to $205. We even chose a random number between $1 and $1000 in to see if a guess could outperform. Luckily, the $408/share prediction generated by Microsoft Excel was the worst prediction,” Arek Schmocker, Corporate Finance MBA student and GFO co-president.
The average closing price prediction was $153.13, within 3% of the closing price, however; the contest winner predicted a closing price of $149.99, or within 1% of the closing price of $149.01.
The Wisconsin School of Business GFO is a student run organization that seeks to educate and engage the graduate student community on matters of finance.