SHARES in Manchester United dropped nearly two per cent during trading in New York yesterday, making it the latest so-called broken initial public offering (IPO).
The stock closed at $13.77 last night, having sunk to depths of $13.30 earlier in the day, below the $14 it floated at just a week ago.
The dip followed news on Wednesday night that United will splash up to £24m on Arsenal’s centre forward Robin van Persie.
Some analysts suggested that the extravagant outlay – which will see the club pay tens of extra millions in wages over the course of the 29 year old’s contract – may have dented investor appetite. Yet others pointed to the stock’s fundamentals, arguing that a slide was inevitable.
Earlier in the week New York analysts PrivCo said the shares were worth less than $5 each, describing the launch price as having “no reasonable economic basis”.
The American Glazer family, the club’s majority owners, initially announced a $16-20 price range for the new shares in its $233m float.
Manchester United are in danger of becoming the latest in a series of disappointing high profile IPOs, following in the unenviable footsteps of Facebook, Zynga and Groupon.
The IPO has been heavily criticised by fan groups who are unhappy at the Glazers for pocketing part of the raised cash, and for only offering shares with weak voting power.
“Given the overwhelming scepticism regarding the ambitious pricing of this IPO it seems there is only one way for the price to go now,” said Duncan Drasdo of the Manchester United Supporters Trust.
Also yesterday, United revealed a commercial deal with Bwin.Party.