It’s true that since the stock market boom in the 80’s began, the speculation business has gripped the minds and wallets of investors from across the world. However, off late, initial public offerings or IPO’s of social networking sites, has really emerged as the next big wave in technology stocks. The recent case or IPO of professional networking company LinkedIn serves as a good example. On May 19, the company went public at $45 per share, escalated to $122 and ended to $94. Sure, the numbers are great but what LinkedIn did was really set the stage for other social media companies such as itself to go there and make roaring success.
“For a while, an IPO wasn’t seen as a viable exit option. If the market is coming back to life, that’s probably a good thing,” said Bill Maris, managing partner of Google Ventures, the venture capital unit of Google Inc recently.
Social Media will lead the IPO carnival in the coming years
There are several social media companies that are likely to get on to the IPO bandwagon this year. Facebook happens to be the hottest of course. Since Google’s IPO that was launched in 2004, this is one of the most highly awaited stock offering. Latest reports regarding this IPO state that it may be out in the third week of May 2012. Even though FB declined to comment, there are speculations that the social networking major may have sent its IPO documents with Securities and Exchange Commission (SEC). The US regulator usually takes around 3-4 months to review the process. Can it be believed that this particular IPO speculation is going on since 2009?
Another example is Twitter which is already taking huge steps towards the IPO direction (rumours are making the rounds that the micro blogging website will go public by 2013). That Twitter will also take the IPO route is only naturally understandable even though the company’s chief executive officer Dick Costolo has said in the past that Twitter would like to remain an independent company.
Social Media IPO’s that did exceptionally well last year
RenRen: According to Reuters, the Chinese social networking website, raised close to $743 million by way of an IPO in May 2011.
Zynga: is a popular social gaming company that went the IPO way last and reports say that since Google, this one has been the biggest success. In Dec 2011, it raised a whopping $1billion!
Groupon: Think Daily Deals! This business struck quite a deal or itself by raising an IPO worth $700 million in November 2011.
HomeAwayHome: This vacation home rental site also did impressively with its IPO that it raised in June 2011. The offering was worth $216 million, according to MarketWatch.
Pandora: When this internet radio website went public in June last year, hardly anyone thought it would make up to $2.56 billion. As on Dec 2011, the company has a market value of $1.71 billion.
Angie’s List:This is a site where users review doctors, contractors and more. It went public in November 2011 and was able to raise $130 million, according to VentureBeat.
There are many more like the ones mentioned above but we will stick to this list for now. The point to make is that in 2011, social media IPO’s were so popular that investors just skipped doing their stock specific research and invested. With confidence. And evidently, since these social media companies made major headlines with their IPO’s, investors were surely not disappointed.
Fast Forward: IPO’s Now
Considering the social media IPO performance last year, the trend will be no different in this one. Facebook (followed by Twitter) will be leading the bandwagon, of course. In reality, the Facebook IPO can even be one of the largest web offerings in history.
Let’s wait and watch how that pans out. Definitely the world of IPO’s has spread its wings and social media companies are making the most of it. The future’s only getting brighter.
Nargis Namazi
