“Going forward with a mission-critical, best-in-class, industry-standard suite of e-business solutions for the 21st century B2B value-added growth-at-any-price-Dow 36,000 wakka wakka cha-ching CLEC fiber.”
That’s pretty much how you answered the phone when I worked on Wall Street from 1998 to 2000, perhaps the fattest two years in the long history of the place. Man, we rolled all sorts of IPO falafel: PlanetRx, EToys, Palm. If you could click it, we could flick it—to avaricious clients, that is. No one’s much since cared for the stock market.
I often get nostalgic for those years of magical thinking and launch parties, especially now that old bubbleheads like Amazon and Priceline are bona fide, Henry Blodget is a media mogul, and someone is taking another crack at delivering 99¢ Junior Mints. Also, Semisonic, one of my favorite rock acts, is mulling a comeback, and Elian Gonzalez, the Cuban kindergartener who caused an international incident out of my hometown of Miami, is now 20 and about to run for office in Havana.
The Street and Valley are enjoying the hottest year for initial public offerings since the turn of the century (PDF): This week’s $2.4 billion debut of Hilton Worldwide Holdings ranks as the third-largest so far in 2013 after Plains GP Holdings ($2.9 billion) and Zoetis ($2.6 billion). The dollar volume of U.S. IPOs is up 38 percent this year, to $58 billion.
It’s safe again—even encouraged—to go public as a dot-com, in the shadow of Salesforce.com’s nosebleed valuation, Facebook being worth $130 billion and joining the Standard & Poor’s 500-stock index, and Twitter setting new records daily. Coupons.com, which was founded in 1998 but missed its chance to cash in, plans to go public next year and has tapped Goldman Sachs to run its deal book, according to people with knowledge of the matter. The concurrent decline in newspaper circulation and more consumers using digital coupons had RetailMeNot going public earlier this year and Ebates Shopping.com eyeing a 2014 IPO, people familiar with the matter said this week. Indeed, RetailMeNot just came back to the trough with a secondary offering of its stock yesterday at a 24 percent premium to its July IPO price. Also in the IPO hunt: dating site Zoosk (whose mascot is the second coming of the Pets.com sock puppet) and online-ad players TubeMogul and Rubicon Project.
Sell it like it’s hot, right?
Portfolio manager John Barr of Needham Funds was recently asked on TV if we are in another tech bubble. He writes:
“My answer was that there are pockets of exuberance, but we are nowhere near 1999. LinkedIn, Twitter, Snapchat (private), and Facebook—No, those don’t make sense to us valued at over 10 times enterprise value to revenues and are not profitable. These ‘story stocks’ are equities that traders love to hear about. We believe a few of these new story stocks may develop into great, profitable companies, but at these valuations there is little room for error.”
Barr cites Google’s IPO at $27 billion and its $1.7 billion YouTube buy as two examples of valuations that “seemed to make little sense at the time, yet, they turned into great investments. … Today’s IPO companies are larger, more profitable, older and valued at a discount to the class of 1999.”
Thus, a story kicker I have been dying to use for 15 years. Wait for it …
Closing time: Every new beginning comes from some other beginning’s end.