Date of Submission
Campus Only Senior Thesis
Bachelor of Arts
Richard C.K. Burdekin
© 2019 William M Buckstaff
This study examines the effect that emphasizing company growth instead of revenue has on first day and first month initial public offering (IPO) returns for venture-capital backed companies. I define this growth oriented business model as viral. There has been increasing market consolidation with tech firms that experience high network effects and are more viral, so I hypothesized that new entrants to this space would be treated with more scrutiny and have lower IPO returns. Virality is defined as the amount of a company’s market share and revenue that can be explained by achieving significant network effects. I measure virality by assessing the amount of emphasis companies place on growth as opposed to revenue and profitability. This was done by examining consistent elements throughout my sample companies’ IPO prospectuses to gauge the network effect they were seeking to achieve. My findings yielded significant results contradictory to my hypothesis: companies that are more viral have higher first day returns than their non-viral counterparts.
buckstaff, william, "Viral Business and Initial IPO Returns" (2020). CMC Senior Theses. 2316.
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.