10 IPOs that flopped
True to its midwestern roots, VeraSun was corn fed. The producer of ethanol started up business in 2001 amid rising interest in green energy. At one point, the bio-refiner had 16 production facilities in eight states. In June 2006, VeraSun was the first pure-play ethanol producer to go public, raising $420 million. The stock launched at $23, exceeding its estimated target range.
Soon after, VeraSun executives must have felt as is they were at the wrong end of a target range. The company took hit after hit, and by Oct. 2007, the stock had dropped to $10. But the biggest disaster was still ahead. Convinced recent flooding would drive corn prices through the roof, VeraSun hedged its bets by locking in prices on the commodities futures exchange. But VeraSun guessed wrong, and when corn prices dropped by half, the ethanol producer found itself paying hundreds of millions of dollars more than necessary for its raw material. The company filed for bankruptcy protection in Oct. 2008.