free html hit counter The IPO Markets and the Internet: A Thaw's A Comin' - John Battelle's Search Blog

The IPO Markets and the Internet: A Thaw's A Comin'

By - September 16, 2009

Unemployment is up and continuing to rise, the recession, while possibly, maybe, sort of technically over, does not feel over at all, and while Murdoch says “things are better” in the advertising economy, “better” means “no longer totally crap.”

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So why on earth would I write a headline like the one adorning this post?

Because despite all that bad news, there’s a fair amount of good news in the web space. A number of healthy private companies are doing quite well, and seem poised to become serious IPO candidates. Among them:

Facebook. The company said it’s now cash flow positive and has been profitable for several quarters. This is the final step toward a public bow, one that could possibly stimulate a wee bit of Googly optimism, just as Google did during the mini-boom of 2004-07.

Demand. According to all accounts, this company has been profitable for several years, is growing nicely, and has revenues well over nine figures. Its search/content/social media mashup model is unique and growing.

Linked In. With a new CEO (Jeff Weiner) who would not have joined had there not been a promise of a large exit, multiple revenue sources, and a strong community, Linked In is another late stage company in the Big IPO queue.

Three companies does not a trend make, but I am sure there are others, and there are even more companies that are one to two years out (like Twitter, for example). It doesn’t take that much to get a trend going in these markets. Unlike the bubble of ten years ago (wow, has it been that long), these companies all have profits, histories, and strong operating plans. And the markets have been on a tear, there is plenty of money on the sidelines, and folks are looking for a place to take a little risk after a year of hiding in treasuries and triple A-rated muni bonds.

In short, I think the IPO market is back on the table, and I would not be surprised to see it start to take off in the next several quarters.

Who did I miss, and what companies do you think might be ready to go soon?


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7 thoughts on “The IPO Markets and the Internet: A Thaw's A Comin'

  1. Doug says:

    John – I think your post is very timely. The equity market has witnessed over the last six months a stronger bias to the upside on good news and less of a pullback on bad news.

    The major banks and financial companies have also had time to sort out their unwanted inventories and have repaired balance sheets with positive quarterly cashflows.

    The money center banks will be looking to recharge the IPO market as equities climb higher and the companies you cited in your blog become more attractive to the public markets.

    I don’t have any suggestions but I am sure the investment banking community have their lists and are checking them twice.

  2. Niki Scevak says:

    Another screaming candidate is Quinstreet who, although private, announced yearly revenue of $261m and ebitda of $57m (their fiscal year ends June). See more here: http://www.prweb.com/releases/2009/08/prweb2750964.htm

  3. James B. says:

    Niki is right. QuinStreet has also made some big acquisitions over the past few years including SureHits, Vendorseek and now Internet.com. That along with the numbers Niki described above make them a pretty strong candidate for the IPO market.

    See more on acquisitions here:
    http://www.washingtonpost.com/wp-dyn/content/article/2008/06/02/AR2008060201355.html

    http://blog.leadcritic.com/featured/quinstreet-acquires-surehits

    http://www.tradingmarkets.com/hpad/index.cfm?purl=/.site/news/Stock%20News/2471331/

  4. Robert says:

    You forgot Yandex (www.yandex.ru), the Russian search engine.

  5. I don’t have any suggestions but I am sure the investment banking community have their lists and are checking them twice.

  6. Peter says:

    Congratulations! Your readers have submitted and voted for your blog at The Daily Reviewer.Internet is spreading like a fire in the forest. People are more crazy about internet nowadays…Internet is providing every single facility to every one either that is shopping or reservation related. Through internet you will get every service related to ant work…

  7. Peter says:

    And with reCaptcha, Skype, Omniture, etc. acquisitions I think we will also see renewed vigor in the strategic acquisitions space. It is once again good to be an Investment banker in the tech/media space!