More often than not, investing in an IPO proves to be a worthy investment, that is, if the company being listed actually has something to offer in the long run.
What many of us don’t, or at least didn’t know, is that Mastercard wasn’t always a publicly-traded company. In fact, Mastercard went public back in 2006, on May 25th, almost 40 years after its inception as the Interbank Card Association.
Seeing how Mastercard is the world’s 23rd most valuable company as of this moment, we thought we’d tell you a few things about its IPO. And maybe, just maybe, you’ll be able to use this knowledge to predict the next big gainer.
It Could’ve Made You A Millionaire
Despite Mastercard being a relatively young publicly-traded company, its early investors have already made a lot of money off of their initial investment. In fact, anyone that has invested in MC back in 2006 is probably retired by now. Or at least, they could be.
If you don’t believe us, let’s just do some math
If you had invested just ten thousand dollars into Mastercard back in ’06, you could’ve bought 256 shares at $39 a pop, which is what they were listed at the time of the company’s initial public offering. As of this moment, a single Mastercard share is $374. Only a few days ago, it was $396. That’s over ten times as much compared to 2006.
For the sake of argument, let’s just circle it to ten and look at the math. Your initial $10,000 investment would be worth $100,000 as of this moment. But, how’s that a million?
Well, one thing we didn’t mention is that Mastercard split its shares back in 2014. They split it in a 10-for-1 fashion, meaning you would’ve had another 10x on your hands, leaving you with a total of $1,000,000 (not counting a few grand in dividends) in a little bit over 15 years.
Mastercard Made Over 2 Billion That Day
You would’ve made a million, but Mastercard, thanks to Charles Gregor, the man behind the IPO, made over 2 billion dollars on the day of the offering. To be precise, Mastercard made over $2.4 billion dollars, nearly doubling its total market capitalization.
As of today, Mastercard’s market cap sits at nearly 367 billion. They’ve grown nearly 120 times from the day of the IPO, so we feel like it’s safe to say that going public was a pretty good idea for Mastercard as a company.
Price Could’ve Been Higher
Everyone knew Mastercard was going to be a success. Not only were they two years ahead of Visa, their main competitor that went public in ’08, but everyone at Mastercard knew that the era of electronic payments was upon us, so they knew they were a lock for success.
Because of it, the initial listing should’ve been at $40, but due to Vonage IPO launch historically failing a few days earlier, Gregor decided that it would be better to lower the price per share. Turns out – that was a brilliant idea.
Conclusion
There you have it. Those were some interesting facts about Mastercard’s famous IPO launch in 2006. Hopefully, you’ve learned something new.
