As Erick pointed out yesterday, IPO registrations are up. But even if all of these companies go out, does this mean VCs are out of the no liquidity woods? Hardly.
Sure everyone brings up LinkedIn and Facebook as the potentially huge homerun IPOs in the wings, but a lot of the companies queuing up look more like OpenTable.
The reservation Web site deserves props for making it out in a tricky time— the weekend it was picking its bankers one declared bankruptcy and another sold itself to a competitor. And yes, the price has impressively stayed above the $20 opening. But take a closer look at the deal: Only three million shares were floated to the public. No wonder the price has held– hardly anyone is in the stock. With a whopping 18 million still owned by insiders and investors, OpenTable looks more like a private company that just did another round of funding than a public company.
Given that insiders of other private companies are increasingly cashing out shares in later private funding rounds, is there practically a lot of difference returns-wise between a heady Series E or a small IPO with such a tiny float?
OpenTable’s real test will be what happens once insiders start selling to get liquidity. CEO Jeff Jordan addressed that in his first post-quiet period interview, shot last week for my Yahoo show, TechTicker. (Clip below, around the seven minute mark.)
Jordan also notes at the two minute mark in this clip that since OpenTable priced, he’s been getting a flood of calls from Valley CEOs who are thinking about filing, so expect the mini-registration boom to continue. Actual returns for the beleaguered asset class, however, will be a different story.
this is one of the very few Internet companies that has a solid and sustainable model with real barriers set up. Linkedin is a good site but they don’t have any close to the franchise that OpenTable has.
its the other way around
It is too late for LinkedIn to get into the IPO race. At this point, why would anyone pay to use LinkedIn? A lot of information can be gathered free now. If I want to get hold of someone, I will just use twitter or message them on Facebook.
LinkedIn should have gone IPO 2 years ago.
LinkedIn is making money and they say they’re profitable. If they can grow (top line, earnings and even market share) consistently then you can make a case for them. From what I know (I could be wrong), Twitter doesn’t generate much revs yet let alone profits. Thus, in my view you make a better case for Linkedln than Twitter. From valuation point of view, earnings is a better metric to value off of than revenue or in many cases user count, or time spent on website.
jimjerky – I agree an impressive company but what are the “real barriers”? Do they have long term Ks with restaurants or some other barriers to block a disruptive upstart?
jimjerky:
also interested in hearing about the barriers you mentioned
The barriers are the market itself. It’s very hard to aggregate small business on a common platform. They all want special things and they don’t usually want to pay. Plus their pretty flaky customers.
a barrier into an industry is never the marker itself. I was looking for something a little more specific.
Their service is convenient, but it is a far cry from a perfect solution. possibly switching costs / no similar service offering that is keeping them up for now.
i agree about the small business aggregate, they need their hands held 24/7
Actually, Google and OpenTable have about the same percentage of their shares in float right now. And as the employers at OpenTable exercise their warrants / options, the company’s public float will increase too.
You clearly have no understanding of market liquidity
Wait… a restaurant asseveration company has gone public?
…really?
opentable an IPO. that seems like a joke to me. i think the ceo’s of opentable have been on Linkedin for way to many hours. i give it a maximum of 3 months to go south.
Sarah Lacy, with another actually interesting, well thought out post. A refreshing change of pace.
Sarah, I really enjoyed this article and in fact, most of what you’ve published thus far on TC. I’d like to say that most of whats coming out lately from TC has been drivel and I’m starting to get turned off. It seems to be a lot sensationalism with no substance. A pseudo tech TMZ.com if you will.
With that said, your articles have been informative and interesting. Please keep the good stuff coming.
OpenTable’s shouldn’t be trading at more than $1.49!
Good luck OPENTABLE!
Good to have you back Sarah, very nice indeed, tho its harder for me enjoy your jaundiced eye with the juice cleanse infomercial hanging over you.
It’s long ways away before IPO market will be bright and shinny again. Open Table is a rarity.
like your mom
opentable employees…sell your stock forward today. Sell some calls or buy some puts!!
The Most Interesting Man in the World always gets his table whenever he walks into his favorite restaurants, but wishes the best of luck to open table. Seriously.
Someone get the man a Dos Equis.
+1. Seriously.
OpenTable was merely testing the waters with this IPO. The company is barely profitable and has a short track record. It wasn’t exactly the ideal IPO candidate to get the market going.
If you look back at Vonage, they tried to raise as much money as possible through an IPO, providing a supply that was equal to the demand. The company now trades at 30 cents. (I realize it’s a company with terrible margins and even worse prospects.)
OpenTable will dilute shareholders within the next few months as existing VC investors try to sell into this rally.
Open Table literally puts hardware and software in restaurant locations. And, they have almost *zero* churn.
I am sure you are very wrong about “zero churn” with Opentable.
My take: Open Table IPO’d because they need the money. The hospitality market is tanking right now due to the economy. They are losing clients left and right and needs something to sustain them until the economy rebounds.
Good luck, but $1.49 sounds about right.
When is LinkedIn going to lose its virginity?