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Tech companies don't have the easiest road after IPO

As the clock ticks down for Facebook's IPO, past tech companies prove it isn't smooth sailing onward

Technology trends and news by Krystal Peak
May 17, 2012 | Comments
Short URL: http://vator.tv/n/26cf

With Facebook just hours from raising $16 billion in its IPO, many people are curious just how the company will respond to on the public markets, especially after all the demand from big and small investors.

Predictions just how well the company will do on NASDAQ are varied, with some experts expecting that a 50% pop would be lower than many expectations.

Lee Simmons, industry specialist at Dun & Bradstreet, had a more modest forecast to share with the public.

"You've got a large offering at an increased price, so a huge pop may be difficult to achieve. I'd think a 10 to 20% pop over the offer price is expected," Simmons said. "When you're talking about doubling or a pop the size of LinkedIn, it's more difficult to achieve because Facebook is just offering more shares."

It might help to take a look at the biggest recent tech IPOs and how they did on their opening day and have faired since then. Brace yourself because most have had very bumpy roads, no matter how they faired out of the gate.

 

Ticker: ANGI
IPO debut: November 17.
IPO price: $13.
Now trading at: $13.31.
2012 Q1 revenue: $31.1 million, with a net loss of $13.5 million.

The company rating site, Angie's List, is the oldest tech company that made its IPO in the past year. And Angie's List has faired reasonably well over the last three and a half months, despite its disclosure of net losses for the last few quarters.

The 16 year-old company, made its debut before the holiday scramble and was priced at $13 a share, but has not shown any substantial growth in the public markets.

On the first day of trading, the rating site was up nearly 40% from the original $13 price tag and dipped as low as $15.02, before finally settling at $16.26.

The appears to live comfortably near the IPO price and hasn't had much action in either direction since.

 

Ticker: GRPN
IPO debut: November 4.
IPO price: $20.
Now trading at: $12.37. 
2012 Q1 revenue: $559.3 million in revenue and $39.6 million in operating income.

Known as the largest and first to see significant following in the group-deal buying industry, Groupon made serious waves as it went public last fall. There was a great deal of debate over the valuation of the discount-focused company as it continued to get slammed in the press for hurting small businesses with overwhelming demand for low-cost services. 

And as the IPO approached, the company struggled to show its strength of competitors in the market, including BuyWithMe, LivingSocial, Plum District, Home Run, and dozens of social and search-engine created deal services.

When the company finally disclosed that it only brought in $688 million for the first half of 2011, almost half of the $1.5 billion it claimed previously, investors balked at the company and questioned if it could compete at the $20 stock price it was opening with.

Groupon saw the initial 30% jump on the stock's first day of trading, but in following days dropped nearly 27%.

Earlier this week shares jumped as much as 27% in early trading after the daily deals company posted its first-ever quarterly profit.

While the company is still well below its IPO price, there is hope that the company can rebound if report continue in this direction.

 

Ticker: Z
IPO debut: July 20.
IPO price: $20.
Now trading at: $39.12.

2012 Q1 revenue: $22.8 million.

Zillow is one of several real estate search sites that has seen great increases in traffic and finally the company filed for IPO in April. The company showed that it saw a significant 74% jump in revenue in 2010 to $31 million.

The revenue alone showed promise for the real estate-centric company but, like many tech startups, Zillion was not profitable and lost $7 million in 2010.

When the company opened its trading on July 20, the stock popped 120% and closed out the day nearly 80% above the $20 debut price.

Zillow soon fell victim to the spiky real estate demand and environment and saw inconsistent movement on the market. 

Just a few weeks ago, Zillow reported record revenue of $22.8 million, up 103% over first quarter 2011. 

Zillow felt a great boost from its Q1 earnings report and is poised for more growth as it incorporates the rental marketing software maker RentJuice in bought in $40 million cash earlier this year.

Ticker: LNKD
IPO debut: May 19.
IPO price: $45.
Now trading at: $106.85
2012 Q1 revenue: $188.5 million with a $5 million profit.

The professional networking site, LinkedIn, saw one of the greatest public debuts of the year when it opened at $45 and immediately shot up to over $120, ending the first day of trading at $94.25.

LinkedIn also has shown that it could be profitable as it entered its public trading and disclosed that it made $5 million in profit for the first nine months of the year.

The company also continued to unveil new revenue models throughout the remainder of the year (including the plans for a Talent Pipeline service for recruiters to pay for assistance in tracking possible candidates.)

Since the initial spike was extremely promising to investors, the company is experiencing a now rare boom that has nearly doubled the stock price.

Shares of LinkedIn popped in after-hours trading after the May 3 announcement that the company had a great Q1. The professional network reported first-quarter results that handily beat analysts' consensus estimates and announced that it's buying popular document-sharing platform SlideShare. 

LinkedIn reported a profit of $5 million, on revenue that doubled to $188.5 million. 

The first-quarter revenue, which topped expectations of $178.8 million, up 91% from the year-ago period,represents the seventh straight quarter LinkedIn has doubled its sales. LinkedIn earned $2.1 million on revenue of $94 million during the same period a year ago.

Against most odds, LinkedIn has proved its ability to maintain the, more than double IPO price, stock status it gained early on.

Ticker: JIVE

IPO debut: December 13, 2011.
IPO price: $12.
Now trading at: $18.55
2012 Q1 revenue: $25.3 million. 

Jive Software, the social enterprise and collaboration software company, made its debut in mid-December, just before Zynga, and raised $160.8 million on the NASDAQ.

Jive opened at $16.50, a 27% jump from its IPO price of $12, which was also above an initially anticipated $8-$10 range. 

Volume in early trading was 13.4 million shares (significantly more than the expected 11.7 million). At the current price, Jive is trading at a market cap of $708 million.

The stock only saw moderate action, but has kept strong on its pattern and is now trading near twice the IPO price. While the company has a fair amount of honeymoon left before it becomes a crotchety old stock exchange vet, it shows that the market could be perking up for Internet companies this year.

This enterprise social networking company posted first quarter 2012 earnings and revenue numbers that topped most estimates, earlier this month. 

 

Ticker: ZNGA

IPO debut: December 16, 2011.
IPO price: $10.
Now trading at: $8.25.

2012 Q1 revenue: $321 million.

The buzz has long been weary when referencing Zynga. The company is too young, too unoriginal and too dependent on Facebook. And while all of those claims are still accurate, the recent filing for Facebook to go public shed a really bright light on just how important Zynga is to Facebook -- and that puts the strength back on the side of the San Francisco gaming company. 

It was a rocky road for Zynga, however. The stock broke through its IPO price of $10 a share and ended its debut day at $9.50, down 50 cents. 

A 10% pop is a modest one compared to past Internet IPOs in recent history. Groupon opened on the exchange a substantial 30% above its initial price and LinkedIn opened and almost double the $45 stock price on its first day. Even the now troubled Pandora saw a 31% pop for its stock upon it debut. 

While that lackluster opening set the stage for even more ho-hum trading, the Facebook filing perked up the stock to show 30% growth from the IPO price and could continue to bring the company some modest and stable desire from investors.

Zynga is still struggling to break past its IPO price and so the company has been vocal about adding more in-app purchases, which have proven to be quite the money maker. The gaming company also plans to release more mobile games in 2012 to maintain its healthy growth, the latest one being ZombieSmash, which finally got ported over to the Android platform.

 

Ticker: YELP

IPO debut: March 2.

IPO price: $15.

Now trading at: $20.65

2012 Q1 revenue: $27.4 million in revenue but an overall loss of $9.8 million.

Yelp experienced the always desired tech pop on the public markets when it had its IPO just a few months ago. In the first day of trading it jumped $10, or 67%, to $24.58, after the online destination for for local business reviews and dining suggestions, priced its IPO at $15, and finally closed for the day at $24.50. That's a whopping 63% pop on opening day.

Initially the price the stock was expected to debut at was $12-$14 but at the new $15 marker and $24.50 closing price spurred Yelp to raise $171.5 million for more than a $1.2 billion valuation. 

This 63% pop on its first day of trading puts the company just behind LinkedIn in the most opening day growth for a Internet tech company in the last year. 

But Yelp just experienced a little setback when it dropped nearly 6% on the news that its quarterly earrings report wasn't as rosy as some were hoping.

Yelp reported a few weeks ago that its first-quarter saw a net loss of $9.8 million, triple the $2.7 million loss from the same period a year ago. Sales in the first three months grew 66% to $27.4 million, slightly beating analysts' forecasts of $25 million.

Many are still keeping an eye on Yelp to see if it does take off over seas and on mobile the way that the company has been forecasting, but it is still a newbie on the market.

 

Ticker: MM

IPO debut: March 28.

IPO price: $13.

Now trading at: $12.44.

2012 Q1 revenue: $32.9 million.

Millennial Media almost ended its first day on the NYSE double the IPO price it set.

Millennial which filed its first S-1 in early January, raised over $130 million in the offering, which is up from $75 million originally stated in earlier filings.

Millennial was one of the largest remaining independent mobile ad networks and serves ads to more than 200 million unique users worldwide, including approximately 100 million unique users in the US. More than 30,000 apps are enabled by developers to receive ads delivered by Millennial.

The Baltimore-based mobile advertising company did, however feel a rocky path following the opening IPO boom. In the following weeks and months, the company has not met most industry expectations and it was rapidly approaching its IPO price. Upon the Q1 report that, again, did not meet expectations, the company dropped another 10% in trading and will have a lot of space to make up.

Even as the company reported that revenue rose 53% to $32.9 million, many are waiting to see if it can reach the Q2 revenue expectations of $37 million to $38 million, before backing the stock again.

 


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