Recent IPOs: A Mixed Bag
Published on Friday, 13 April 2012 23:41 Written by Todd Shriber
New York, April 13th (TradersHuddle.com) – Maybe it’s a fondness for the go-go IPO days of the late 1990s. During those halcyon days for Internet and tech stocks, investors literally tripped over themselves to get in on what was viewed as the latest hot IPO. Due to the investment banks and brokerage houses catering primarily to their wealthiest clients, regular investors were often left out of the best new offerings. That created an aura of exclusivity and heightened desire.
Whatever the reasons, investors still love IPOs and the U.S. IPO has obliged recently with an increased pace of new offerings. The new crop of IPOs and their subsequent performances have reminded investors of one thing: Just because a stock is new, doesn’t mean it’s going to offer good returns right out of the gate.
Take the case of Groupon (NASDAQ: GRPN). The daily deal purveyor was one of the first social media companies to go public, though some naysayers questioned the company’s profitability and the fact that there are essentially no barriers to entry in the daily space. Those criticisms have been validated as Groupon shares have plunged more than 48% since the November 2011 IPO.
Staying in the social media space, Zynga (NASDAQ: ZNGA), the maker of online games such as Mob Wars and Farmville, had some struggles for its month or so as a public company. While Zynga has been accused of overpaying for a recent acquisition, the stock is up almost 28% since its IPO, indicating that Zynga might be benefiting from a crucial factor: It was profitable BEFORE it went public.
Yelp (NYSE: YELP), another social media that can be compared to a Craigslist meets Zagat type of Web site, also stumbled out of the gate. The shares slid almost 20% in the days following its IPO, but the stock has been on fire as of late and is now up a solid 7% since coming public. Keep an eye on Yelp as some traders have mentioned it as a possible acquisition target.
Angie’s List (NASDAQ: ANGI), the online consumer reviews site, also debuted in November 2011. In that time, the stock has traded in a range of $10.77 to $19.82. While the stock is 15% higher today than it was when it went public, it’s also lower than where it closed after its first day of trading.
Ceasar’s Entertainment (NASDAQ: CZR), the company formerly known as Harrah’s Entertainment, has gained less than 2% since returning to the public markets two months ago. As we recently noted, this company’s balance sheet is downright concerning with long-term debt of $19.8 billion and other long term liabilities of $6.1 billion, but that also makes Ceasar’s the high risk/high reward play of the companies with significant of an industry that prides itself on high risks with big rewards.
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