Let's Browse a Registration Statement

As mentioned above, the heart of the Securities Act of 1933 is the requirement that every sale of securities be either registered with the SEC or exempt from registration. Let's look at what registration entails.

Linked below is the registration statement for DoorDash's initial public offering. This will give you a sense of why registration is such a costly and burdensome process. As you read, consider how long this took to draft and how many billable hours that cost the company.

• Note how ugly the first page is compared to the second page. This full document is the registration statement. Beginning on the second page is the prospectus. Both are heavily regulated, but the prospectus is where investors typically turn to evaluate the company, so it has a stronger marketing focus. Now hit CTRL-F and search for "Part ii". That will take you to the end of the prospectus. Note that the pretty pictures end and we get back to bland legal disclosures. This is the back end of the registration statement and there are only a few pages. You'll note that most of the registration statement is the prospectus. The few items required to be in the registration statement that aren't required to be in the prospectus tend to be dry, legal-ish disclosures.
• Scroll back to the beginning of the prospectus. Note the price and description of the offering on the front page.
• Note the prominent way the underwriter's names are displayed. 
• Scroll to the table of contents. What sections jump out at you?
• Browse through the risk factors. These are typically organized by the most serious risks first. Which risks jump out at you? How do you think the managers feel about disclosing these to the public (including their competitors)?
• Scroll to the business section. This is where the company tells its story. The company and underwriters spend weeks drafting this to paint the company in the best light for investors. The first sentence is always carefully crafted by the executives, lawyers and bankers. Why do you think they chose this one?
• Scroll to the executive compensation section. How would you feel if your compensation was disclosed like this to the general public? Would $6 million help you get over that? How might disclosing this information cause other executives to renegotiate their salaries? How might this dynamic affect executive compensation?
• Scroll to the financial statements. How would you feel disclosing your margins to your customers, suppliers and competitors? How might that affect your future negotiations?