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Archive for the ‘IPO’ Category

Zynga sets offering price at $8.50 to $10

Sunday, December 4th, 2011

All right folks.. Zynga IPO is coming soon. The company sets the offer price in $8.50 – $10 range. The IPO is expected to hit Nasdaq in mid-December under the ticker ZNGA.

Zynga recorded earnings of $30.7 million for the first nine months of this year, on revenue of $828.9 million. It’s anybody’s guess whether Zynga will go in the way of LinkedIn that trades better than its debut price or Pandora that trades 33% lower than its debut price. I would be a buyer if Zynga really trades at $9 – $10 range on the first day. Zynga’s underwriters have an option to sell additional 15 million shares if the demand is strong. If the underwriters artificially increase the demand and hike the stock price, it’s better to stay away from that game. You can play Zynga games, but don’t play with your money! If the stock shoots up to unreasonable level on the first day, wait till it comes back down to earth.

Groupon IPO

Sunday, June 5th, 2011

Following Linkedin IPO and its crazy valuation, Groupon is preparing for its IPO. The IPO could value Groupon in the border of $20 billion. Groupon filed form S1 with SEC. IPO may happen in 2-3 months. In the form S1 (page 12), Groupon mentioned that it spent $179 million in the first quarter of 2011 for online marketing. However, when the company calculated its first quarter margin, it conveniently ignored the $179 million online marketing expenses and calculated the profit for Q1 2011 as $82 million. If you include the online marketing expenses, the company really had the loss of $82-$179 = $97 million.

These IPOs definitely look sexy based on all the hype surrounding them. However, if you had burnt your fingers in dot com crash of 2000, you better stay clear of all these web 2.0 IPOs until the companies’ profit picture is more clear.

LinkedIn IPO

Wednesday, May 18th, 2011

LinkedIn is opening its doors to public investment (and scrutiny) on Thursday.  Its IPO is the hot topic today. It increased the offering price range from $32-$35 to $42-$45. It’s rare to see a company increasing the IPO price range by $10! It shows the real hot demand for a piece of LinkedIn. If all these hype reminds you of dot-com bubble of 90s, you are not alone. Many people think like that. This could be another hype that could end badly.

LinkedIn earned $15.4 million last year; its revenue was $243 million. If it can fetch $45 price tag per share, the market valuation would be approximately $4+ billion. In that case, market cap will be 258 times greater than 2010 profit and 17 times greater than 2010 revenues. LinkedIn warns that revenue gain would slow down this year and a loss is possible.

I am going to stay away from this IPO if the stock is priced at $45. You will see a lot of day traders hiking up the price on Thursday. Institutional investors that got into LinkedIn early also would try everything possible to hike up the first day price so that they can make huge profits. Invariably, the stock price will come down.

When Google went ahead with IPO, its market value was 16 times higher than previous year’s revenue. Google had better business model than LinkedIn. The hype surrounding LinkedIn is that it is the “first U.S. social media company going for IPO”. It doesn’t matter whether this is the first social media company or third one. What matters is how much money you can make if you buy the stock at inflated price.

The company’s stock ticker will be LNKD in New York Stock Exchange.

IPO Fever

Friday, September 25th, 2009

It’s a sign of changing times. IPO market is picking up again. This week is the biggest week for IPO in the last 18 months. So far this week, five companies raised a total of $2.97 billion making it the biggest for IPO money-raising since the week of April 20, 2008. Another deal from Chinese company Shanda Games is on the way today. The pipeline of companies planning to go public in the U.S. has also been growing over the past two months, with 20 companies filing new registrations with the Securities and Exchange Commission since the beginning of August.

Yesterday, electric-car battery maker A123 systems came out with their IPO and saw the stock soaring 50% on the first day of trading. The company hasn’t made any profits so far. Another hot IPO, Shanda Games Ltd, is coming to market today. It’s expected to trade with the symbol “GAME”. Shanda priced its initial public offering at the high end of expectations and would sell up to $1.04 billion in equity.

If you are getting into these IPOs, keep in mind that first day gains are mostly bubble. Investing in companies with short track record is very risky. It may go in either direction.

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