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

November 30, 2011

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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