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Angie's List falls below offer price, adding to woes of new IPOs

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Angie’s List Inc. fell 9.2 percent on Tuesday, dropping below its initial public offering price for the first time and joining a crop of Internet companies that have lost value since their IPOs this year.

Indianapolis-based Angie’s List, a company that rates plumbers, electricians and other service providers, fell $1.20, to close at $11.80 per share, dropping for the fourth straight day. The company went public Nov.  17 and closed the day at $16.26 per share. The stock has fallen in six out of seven trading days since its debut.

It continued to fall on Wednesday, falling 30 cents by noon, despite a big overall rise in the market.

Groupon Inc. has tumbled 20 percent since its offering on Nov. 3, while Pandora Media Inc. has lost more than a third of its value since its IPO in June.

HomeAway Inc., which went public two weeks after Pandora, has fallen 5.3 percent. Russia’s Yandex NV and China-based Renren Inc., two IPOs from May, also have dropped. All are now below their offering prices.

“It seems that there is a virus running through the sector, with Groupon being the carrier,” said David Menlow, president of Millburn, N.J.-based IPOfinancial.com, a site that tracks stock offerings. “The question now is if the big valuation given to these companies is unwarranted.”

The broader market also has lost ground since mid-year, as the European debt crisis and high U.S. unemployment push down consumer sentiment to levels previously reached during recessions. Still, IPOs have performed worse. Of this year’s biggest U.S. Internet debuts, only LinkedIn Corp., the top professional-networking site, has stayed above its IPO price.

The Bloomberg IPO Index, which measures the performance of stocks during their first publicly traded year, has dropped 26 percent in 2011, compared with a 5-percent decline in the Standard & Poor’s 500 index.

Even as stocks slide, Facebook Inc. is considering filing for an IPO by the end of this year, according to a person familiar with the matter. It would value the social-networking site at more than $100 billion, the person said. That would be twice as high as its valuation in January, when the company announced a $1.5 billion investment from Goldman Sachs Group Inc. and other backers.

Angie's IPO price of $13 valued the company at more than $900 million, or about 11 times sales in the 12 months through September. That compared with Google Inc., which traded at about 5.4 times trailing 12-month sales. Groupon, which like Google was named as a competitor in Angie’s List’s filing, traded at about 12 times sales in the same period.

Groupon, the largest daily-deal site, ended a five-day slide, rising 77 cents to $16.01 per share Tuesday. The Chicago-based company, which had an IPO price of $20, has dropped 39 percent from its high on Nov. 18. It’s been hurt by concern that profit margins will be squeezed by surging marketing costs and rising competition.


 

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  • It Doesn't Matter Now
    The insiders have already cashed in to the tune of millions of dollars when they sold their worthless stock for $18 a share. Now they can sit back, collect their eggregious salaries, and continue to do what they have been doing for 16+ years, lose other people's money.

    They could not care less what the stock price does going forward. Anything they get for the shares their retained will just be gravy as they slowly sell them off over the next few years for "estate and tax planning" purposes.
  • Doubter
    I KNEW I should have shorted that sucker when it hit the market!! Good example of when a Harvard MBA thesis meets reality. Watch this one go the way of Irwin Bank!! Down, down, . . .>>>>
  • FYI
    Another Angie's List story. Maybe they are keeping you informed of this stuff, maybe not.
  • Tell Me Why
    The reason you would buy it is the same reason I bought Amazon stock (AMZN) when they went public, with 0 earnings..... because it is an investment, with risks, in the future potential of the company and their future P/E ratio.
  • hello?
    Paul....Well said! I am still baffled by their decision to create an offering.
  • Price to Sales?
    Whatever happened to using the measure of Price to Earnings (P/E Ratio)?

    "Angie's IPO price of $13 valued the company at more than $900 million, or about 11 times sales in the 12 months through September."

    I think a P/E ratio of 11 to 1 would be pretty darn good, but the E stands for earnings, as in net profit, not for sales, which don't even match expenses. Thus, Angie's P/E ratio would be negative. Tell me again why I want to buy stock in a company that has never turned a profit and can't even realistically project one?

    “The question now is if the big valuation given to these companies is unwarranted.”

    You don't say.

    • day traders
      mark cuban was right about the day traders
    • No surprise here
      I about fell out of my chair when AngiesList announced they were filing for public listing. Just because you have a few employees doesn't mean you're a good candidate for public trading, or that your company is worth jack. Early shareholders just wanted to see if they could become overnight billionaires.

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