JetBlue Airways IPO Valuation

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Prize winner

Case

Reference no. UVA-F-1415

Subject category: Finance, Accounting and Control

Authors: Michael J Schill (Darden School of Business, University of Virginia); John Owen (JetBlue Airways); Garth Monroe (Darden School of Business, University of Virginia); Cheng Cui (Darden School of Business, University of Virginia)

Published by: Darden Business Publishing

Originally published in: 2003

Version: 3 August 2017

Revision date: 14-Aug-2017

Length: 19 pages

Data source: Published sources

Topics: Corporate valuation; IPO underpricing; Finance; Corporate finance; Discounted cash flow

Notes: Video clips accompanying the exhibits for the teaching note are available from www.dardenpublishing.com.

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Abstract

This case examines the April 2002 decision of JetBlue management to price the initial public offering of JetBlue stock during one of the worst periods in airline history. The case outlines JetBlue's innovative strategy and the associated strong financial performance over its initial two years. Students can value the stock and take a position on whether the current USD22 to USD24 per share filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. A short video clip is available to registered faculty.

Industry:

Transportation