Royal Mail Stock Price Nearly Doubles

Royal Mail stock price

In October 2013, the United Kingdom’s Royal Mail became a publicly traded entity. The initial public offering (IPO) generated a cash infusion of $5.25 billion (in U.S. dollars) to help fund government operations, but could the United Kingdom have received even more from the sale?

Royal Mail shares were issued at the offering price of $5.24  (in U.S. dollars) each, and by the end of the first day of trading, shares had risen 38 percent to $7.23. While some questioned the valuation of the stock at its initial public offering given the substantial rise in price, government regulators discounted the steep increase as froth in the market on the first day of trading. Nearly six months following release, shares have continued to rise, topping $10.13 (as of 2/20), or an 85 percent increase (plus an 8 percent increase in pound vs. dollar exchange rate appreciation), since the IPO. The staying power and continuing rise in the stock price could be a strong indication that IPO evaluators may have short changed the British government in pricing the nearly 500 year-old mail service.

While many institutional and other investors have taken advantage of the increase in value of Royal Mail shares, employees are also benefiting from the higher valuation. Of the 1 billion shares issued, 100 million shares of the company were divided among the more than 150,000 employees for a present value of $6,746 per employee. In addition to the substantial price appreciation, the company is also expected to begin issuing dividends later this year.

What do you think about the Royal Mail IPO?

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3 Comments

  1. Grannybunny

     /  February 21, 2014

    The continuing questions regarding the adequacy of the IPO valuation are yet one more reason — if anyone needs one — why privatizing public institutions is “bad business.”

  2. Jonn

     /  February 24, 2014

    Wow, what a gain. It does show 1 thing. People still believe in a strong mail service for many years to come, and they’ll willing to prove it by investing in the company. I hope those employees don’t sell their shares. They’ll probably be worth a lot more by the time they retire.

  3. Big Red

     /  March 3, 2014

    I hope that 6,000 helps to offset the loss of income for the workers.
    Sounds like no help with the loss of jobs, and the loss of service to the public.

    I hope we can fight off the privateers in the U.S. I’m sure the fake crisis is designed to force us to sell off the package part of the USPS, which will go to UPS which will charge much more and then sub-contract those deliveries to the USPS for peanuts.

    I hope everyone who reads this will send letters to their Representatives and to their local newspapers and urge their families and friends to do the same – remind them that the USPS is NOT a business, it’s a service guaranteed to us by our Constitution that doesn’t cost us any tax money and delivers the lowest cost service 6 days a week!

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