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Tom.com 2000  
 
Product Ref: 00/96C Company: Tom.com

Product Type: Case Industry: Software & Services

Related Product(s): Teaching Note
Authors: Ko Wang   Su Han Chan   Mary Ho
On February 18, 2000, month-old internet startup, Tom.com, began its initial public offering and would open for trading on March 1 on Hong Kong's Growth Enterprise Market. The internet company, majority-owned by Mr. Li Ka-shing's Cheung Kong Holdings and Hutchison Whampoa, planned to catch the frenzy that Hong Kong's investors had for new internet stocks. The huge demand for Tom.com shares raised internet frenzy in Hong Kong to new levels reminiscent of the red chip fever of 1997. Many of the retail investors had no idea what the company did but were betting on the IPO being a winner largely because of Mr. Li's clout with China. In this case, the student is asked to serve as an investment adviser to a retail investor considering subscribing to Tom.com's IPO. The student will provide an analysis of the risks and opportunities of investing in Tom.com and make a recommendation on whether the client should buy Tom.com's shares at the offer price. The case is intended to highlight the complexity of pricing internet stocks that rarely have much of a track record for investors to study and the irrational investing behavior of Hong Kong's small investors.
Functional Area : Finance & Investments

Issues: Valuation of Internet Stocks, Initial Public Offering, Investor Behavior
Length: 20 pages Country: Hong Kong SAR

Pub. Year: 2000 Level of Difficulty: 2
         
This product type is available in the following language(s):      English
         
Related Information: http://www.tom.com
 
This case is UGC funded.
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