The economy may be hurting, but it's tough to keep a good company down. Despite the down market, TheStreet.com reminds us that 478 firms went public last year - a far cry from 2007's peak of 555, but still impressive. While it remains to be seen whether 2011 can meet or top last year's figures, most experts agree that this will be a big year for IPOs. Leaving aside the expected "re-IPOs" of bailed-out enterprises like Chrysler and AIG here are some of 2011's big IPO probables:
Dismissed by many early on as "just another social site", LinkedIn has quickly become a powerhouse, all but cornering the market on social networking for businesspeople. Now the company is ready to capitalize on its success and go public before 2011 is out. According to Bloomberg, LinkedIn now has over 1,000 employees and, more importantly, some 90 million active users.
The company is reportedly in talks with Bank of America Corp, JPMorgan Chase & Co and Morgan Stanley to finish an IPO prospectus by the end of Q1. Following a July 2010 sale of a $20 million stake to Tiger Global Management LLC, LinkedIn was estimated to be valued at more than $2 billion, according to those "familiar with the matter" at the time.
While many analysts expect Facebook to IPO in 2012, others believe they could surprise the world and do it this year instead. Five years ago, it would've seemed absurd that a social networking site could seriously sell stock to the public. Today, no one is laughing. CEO Mark Zuckerberg is now a paper billionaire, and as 247WallSt.com explains, the $500 Goldman Sachs just invested into the company values Facebook at $50 billion. Whether the IPO occurs this year or next, it's sure to be one of the most talked-about events on Wall Street in a long time.
It's rare that one entrepreneur creates not just one but two completely separate, industry-changing products in less than a decade. But after spearheading the Kazaa P2P network, that's exactly what Swedish businessman Niklas Zennstrom did by founding Skype, the P2P telephony service. Of course, Zennstrom left the picture after selling Skype to eBay. eBay, in turn, has since sold Skype off to the private investors who are now ready to bring the company public.
As Reuters reported in November 2010, Skype will indeed go public at some point during 2011 and expects a valuation between $750 million and $1 billion. Goldman Sachs is said to be leading the charge with the assistance of several "joint book" running managers like Morgan Stanley, Citigroup, JPMorgan and Barclays Capital. Additionally, companies like Yahoo, Microsoft, Google and Apple all reportedly expressed some degree of interest in pre-IPO stakes or investments.
Although it lacks the instant name recognition of, say, Facebook, Zillow has quietly become one of the world's largest and most frequented real estate websites. In a January 2010 article, BusinessWeek discussed the way that Zillow is attempting to position itself in the market. Rather than taking a valuation hit because the company is unprofitable, Zillow contends that it should be priced similarly to other online market leaders, such as WebMD and OpenTable, Inc.
Achieving a lucrative IPO could be a real challenge, however - especially given that other big-time real estate sites like Realtor.com and Move, Inc. have been unable to shake their own low valuations. Even CEO Spencer Rascoff freely admitted that "the comps are awful." Nonetheless, Zillow seems determined to move forward with its IPO in 2011.
It's not every day that a CEO can rightfully claim to run "the fastest growing company ever." Yet according to Forbes, that is precisely where 29 year old Andrew Mason finds himself. The online group buying website has attracted a rabid audience in record time - and, importantly, rock-solid profitability. Unlike so many other "dotcom" startups, Groupon is a legitimate business, turning a profit just seven months after inception and generating annual revenues in excess of $300 million.
With a valuation approaching $1.5 billion, perhaps it's no surprise that Groupon rejected a $6 billion buyout offer from Google and is instead opting to go public.
TheLadder.com is a classic example of a company who focused hard on a specific niche and rode it to the big time. Set up as a job board solely for $100K employees and up, the NYC-based company hit $100 million in revenue during 2010 and is primed for an IPO sometime this year. According to BusinessInsider, employees "who have been around long enough" are due to cash in huge when the eventual IPO takes place.
For some, Facebook games like FarmVille are a pleasant pastime (or an insufferable annoyance.) For Zynga, they are the ticket to a big-time Wall Street IPO. In October 2010, InvestorPlace wrote that:
"...Zynga stock is now valued at $5.51 billion, surpassing Electronic Arts (NASDAQ: ERTS), the one-time most valuable game publisher on the planet whose stock is now valued at $5.16 billion."
FarmVille specifically is projected to be worth as much as $3.6 billion in revenue by 2013, making it no surprise that Zynga is ready to cash in by selling its stock on the open market.
Demand Media, a mass producer of web content (articles, tutorials and lists) based in Santa Monica, is set to IPO this year with 4.5 million shares priced between $14-$16 each, according to the Wall Street Journal. The company, with its roughly 13,000 content creators is hoping to raise upwards of $138 million from the offering, the Los Angeles Times reported on January 12.
One potential red flag: Demand Media's prospectus filed with the SEC reported "$3 million in losses from $179 million in revenue for the first nine months of 2010, compared with a $30-million net loss from $198 million in revenue for all of 2009."
After being taken private in 2005 by a private consortium of investors, toy retailer Toys "R" Us is poised to re-enter the stock market in 2011. Interestingly, the company does not appear to be in the excellent financial shape befitting of an upcoming IPO. According to Reuters, Toys "R" Us reported a net loss of $14 million in Q2 last year - compared to 2009's net profit of $27 million during the same period. Besides that, sales "were almost flat at $2.6 billion, while total operating costs rose 8.2 percent."
BNet sees potential problems with the company's planned $800 million offering: namely, high executive turnover, slow progress in new store roll outs and a "ticking time bomb" of debt.
ZipCar has risen to prominence by addressing a clear-cut market need. Rather than becoming a "me-too" rental company, ZipCar created the entirely new business model of "car sharing." Using this approach, customers can pay membership fees and use cars by the hour for quick around-town errands. Aimed at city dwellers and college students, the company brought in $55 million in revenue during Q4 - despite being on and off profitable at best.
Back in June, the Wall Street Journal broke news that ZipCar was eyeballing a 2011 IPO. While many experts still expect the offering to occur, some wonder if it will be called off following the procurement of $21 million in Series G financing.
In a January 7 article, TheStreet.com speculated that Niesel Media could set the stage for many of 2011's big-time IPOs. The company, known for its TV commercial ratings and audience measurements, is widely expected to seek a $1.75-$2 billion offering sometime this year. Renaissance Capital, in turn, told TheStreet that such an IPO could pave the way for HCA (the world's biggest hospital operator) to chase an even bigger payday - upwards of $4.6 billion.
Underwriters are led by JPMorgan Chase and Morgan Stanley, according to Reuters, and the above mentioned Toys "R" Us IPO could follow soon after.
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