Social Media IPO Update

In June 2011 we wrote an article entitled What the LinkedIn IPO Means for the Stock Market. In that article, we compared the buzz around social media initial public offerings with the “dot com” bubble of the mid to late nineties.
Since then, most of the social media companies mentioned have either had an IPO or have filed for an IPO. While these IPO’s do grab headlines, they have had a mixed response from investors.
Investors have loved LinkedIn. That IPO came out at $45 per share. The price quickly doubled, and now trades at $91.12. Groupon priced its IPO at $20 per share. Unfortunately, this IPO has had trouble staying above that initial price, and is currently trading at $19.60 per share. Zynga was the last social media company to go public. Its December IPO was priced at $10, and is currently trading at $12.80 per share.
Yelp plans on going public in March of 2012. Then in May of this year, the big Kahuna, Facebook, is coming to the market. Finally, Twitter plans on going public in 2013.
So far, we have not seen the frenzy of IPO filings and speculative investment that we saw with the “dot com” bubble. However, the number of IPO’s in the social media arena—and in the market as a whole—probably point to a more positive investing climate now and in the future.
Generally speaking, IPO’s are a fairly speculative form of investing. We would advise not putting all of your eggs in one basket—and definitely not in a high risk basket, such as IPO’s.
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