Following the floating of Medibank on the Australia Stock Exchange (ASX) in late November, the immediate aftermath seemed to be overwhelmingly positive. The share price reached $2.22 on its opening day, a figure welcomed by investors who managed to buy their stake in the company for the issue price of $2.
However, the price has fluctuated since then, getting within 8 cents of that $2 ceiling in the two days after the company was officially publicly traded. Since that tumultuous start, the fluctuations have continued but it now appears as though the price is going in the right direction.
Retail share prospects
In what will be music to the ears of retail shareholders who were part of the initial public offering, the value of Medibank could be set to skyrocket well into 2015. Queensland's Courier Mail reports that the stock has the potential to go as high as $2.70 a share in the beginning of 2015.
There are a number of factors which will account for this boosted growth, despite the worrying start following the initial flotation. Medibank could be set to become one of the ASX100?, or one of the most valuable stocks that typically attracts interest from the most powerful investors. If investment from the big firms does proceed at an accelerated rate, it is highly likely to boost the price of the stock.
Furthermore, due to the way the IPO was structured, some investors who pursued stock did not get as much as they wanted when Medibank was first listed on the ASX. If some of those renew their interest, this will likely push the value of the shares higher, too.
Small investors benefiting
Medibank is a recognised and respected name across Australia, which is part of the reason why the flotation drew so much interest.
As there was a concerted effort to allow retail investors their bite of the cherry, the listing effectively received more attention from the wider population.
Rather than being reserved for the big firms of investment bankers, the perception is that the Medibank flotation was/is more likely to be successful due to the fact it was more accessible to more of the general public.
Whether that perception is entirely true or not is open to interpretation, but there's no denying that with more people having a knowledge of Medibank going private, the shareholders who did get in early may well be the ones to benefit.
True value remains to be seen
As reported by the Financial Review, Credit Suisse described the Medibank stock price as under-performing. Conflicting statements will often lead to confusion amongst investors, which is why the long-term stock price is so hard to pin down. Ultimately, the true value of the Medicare flotation may not be seen until way into 2015.
Despite Minister for Finance Mathias Cormann stating that "Medibank would perform even better in private hands," the quality of service provided by the company will likely be reflected by the share price.
Australians that use Medibank services will be quick to voice their concerns if the flotation and privatisation do begin to reflect badly on the quality of the provided services. However, a high share price will of course lead to a higher valuation of the company, something which could bring with it increased profits and ideally, better experiences for those dealing with Medibank.
If you are concerned about how Medibank will perform in the coming months, finding the right private health insurance can help you be covered for a raft of different treatments and put your mind at ease. Taking out a new policy or even upgrading a current one doesn't have to be a particularly difficult process. For expert, impartial advice, consider giving HICA a call on 1300 44 22 01 and make the whole process easy.