How Does Facebook Measure Up to Other “Hot IPOs”?
Google (GOOG)Google, the world's largest search engine, went public in August 2004, selling 19.6 million shares at $85 per share. The sale raised $1.67 billion in cash and instantly gave Google a market capitalization of $23 billion, starting its trailing P/E at 67.5. Shares started trading at $100 and gained 8% the first day, then gradually soared to an all-time high north of $700 by 2007. In 2012, shares have been rock solid, and the company has grown comfortably into its $200 billion valuation, trading with a comparatively cheap forward P/E of 20. Google's success is considered an industry benchmark in measuring an Internet IPO's future prospects.
Zynga (ZNGA)Social game maker Zynga, which is the source of 12% of Facebook's revenue, wasn't so fortunate. Its IPO was priced at $10 per share, which gave the company an initial valuation of $7 billion - or 77 times trailing earnings. Over the next four months, shares gradually rose, but not before dropping to under $8 a share and shaking out some nervous initial investors. The company then failed to reassure investors in its first reporting quarter, posting a 50% decline in profits due to higher expenses. This caused analysts to peg the company's fair value at a mere $6 to $7 per share.
Groupon (GRPN)Groupon, the group coupon bidding site, was thrust into the media spotlight after turning down a $6 billion buyout offer from Google. Even after an initial SEC criticism of
Published on Feb 15, 2012By Leo Sun
Posted in ...Market Commentary