As Facebook gears up for one of the largest Internet IPOs this year, they may want to take heed of this interesting analysis compiled by Tableau Software’s Daniel Hom. As you can see in the chart below, many social media companies start out strong in the public markets, and then take it on the chin. In fact, after 150 days the social media companies that conducted IPOs last year were down, on average, 2.8 percent.

Of course, that’s often the natural path of IPOs, since insiders typically get the opportunity to sell after six months. In the case of Zillow, company insiders were able to sell a portion of their shares after three months, which negatively impacted the stock for a short spell. But Zillow — one of the stronger performing tech IPOs of the past year — is now back up again trading around $30 per share. (It went public at $20).

According to Hom, only LinkedIn, Zillow and Bankrate continue to beat the Nasdaq. Hom did not include Yelp in the analysis, which went public today and promptly soared 60 percent.

Do you think Facebook will pop, and then fizzle? Or will it be the next Google?

Comments

  • Guest

    “Be warned Google fans: Search engine IPOs usually start with a pop, then plummet”

    “As
    Google gears up for one of the largest Internet IPOs this year, they
    may want to take heed of this interesting analysis compiled by Lehman Brothers’s Christy McAllister. As you can see in the chart below, many web search companies like Yahoo! and Excite start out strong in the public markets, and then take it
    on the chin. In fact, after 150 days the social media companies that
    conducted IPOs last year were down, on average, 2.8 percent.

    “Of course, that’s often the natural path of IPOs, since insiders
    typically get the opportunity to sell after six months. In the case of
    Red Hat, company insiders were able to sell a portion
    of their shares after three months, which negatively impacted the stock
    for a short spell. But Red Hat — one of the stronger performing tech
    IPOs of the past year — is now back up again trading around $30 per
    share. (It went public at $20).

    “According to McAllister, only Yahoo!, Excite, and Lycos continue to beat
    the Nasdaq. McAllister did not include MySapace in the analysis, which went public
    today and promptly soared 60 percent.

    “Do you think Google will pop, and then fizzle? Or will it be the next Microsoft?”

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