Caesars’ remarkable first trade day
Caesars Entertainment (CZR) launched in an initial public offering (or IPO) on February 8, 2012. The IPO offered 1.81 million shares to the public at $9 each with a total value of $16.3 million. The move offered liquidity so that minority shareholders could exit, as it allowed them to sell 34.7 million shares following the offering out of CZR’s 125 million total shares.
The above chart shows that Caesars Entertainment’s share price opened at $9.06 on NASDAQ in the first trade day, up slightly from its IPO price of $9. However, it quickly surged and peaked at $17.90 before closing at $15.39, up 71%. Heavy trading occurred in Caesars’ first trade day as a public company with 11.6 million shares changing hands. CZR’s first trade day was one of the best IPO performances in the history of the U.S. stock market.
CZR has given a return of 44% when compared to the IPO price of $9. However, it has given a negative return of 15% since the close of the first trade day. CZR has been actively traded over the last year amid debt restructuring plans. CZR’s debt at the time of the IPO stood at ~$19.6 billion with ~$1.2 billion in equity.
Share prices of CZR’s peers like MGM Resorts (MGM) and Boyd Gaming (BYD) have also performed well in the past. These companies are a part of ETFs like the Consumer Discretionary Select Sector SPDR Fund (XLY) and VanEck Vectors Gaming (BJK).
Wall Street analysts attributed CZR’s first trade day gain less to the company’s business fundamentals than to its small 1.8 million share float, which was only 1.4% of its total shares. Fitch Ratings said that CZR’s IPO would have no material impact on CZR’s credit profile.
Reportedly, CZR filed for an IPO in 2010 when it hoped to raise around $500 million, but it had to withdraw the IPO due to inhospitable market conditions.