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IPOs

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Looks like Facebook’s IPO will not happen until late 2012. Also looks like Groupon and Zynga are to delay their listings. Same applies to Twitter.

The immediate reaction would be to talk of bubbles bursting and volatile markets. But each of these cases is very different:

Facebook is going gangbusters. It has plenty of cash and the ability to raise more outside the public markets. An IPO would be a great distraction – particularly as it faces its biggest ever battle with Google+. Many companies thrive much better as a private concern than under the gaze of public scrutiny.

I’ve never thought much of Groupon. It certainly doesn’t work for me and, it seems, for many others including the retailers who offer the coupons. On top of that, it is such an easy-to-copy model. I wouldn’t touch it with a barge pole.

Zynga has a great model – as I said in Money for Nothing and the Chicks ain’t free. If Zynga delays its IPO, market volatility would be a valid factor.

Last week Twitter announced that it had 100m users – up over 80% since the start of the year. Recently Twitter raised $800m – but $400m of this went straight out to investors. Although valued at c$8b, Twitter still only has revenues of $150-$200m and has yet to prove that it has a viable business model.

So each of these social technologies companies is in a different state and has a different agenda for its IPOs. If the stock markets are wise enough not to welcome ‘bubble stocks’, then that is no bad thing. If companies concentrate of building great businesses rather than making money for a few investors, then we all gain.


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