So How are those Offline IPOs Doing? Part 1
Eric is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
IPOs are always exciting. Who doesn’t like it when a new company arrives on the stock market? It’s fun to watch a new stock’s price jump and pop in its first few days after going public. There has been a host of new stocks to watch over the past year, as companies lose their inhibitions about floating shares and a few middle-sized and big names come to market (hello, Facebook!).
Much coverage has been devoted to some of the better-known companies whose stock now trades regularly, not least because they operate mostly or entirely in the online space. Most of us have used Yelp (NYSE: YELP) to find information on a local business or considered, at least, buying one of those deals featured on Groupon (NASDAQ: GRPN). But as we’ve seen over the years a strong internet brand name doesn’t necessarily translate into strong financial performance, and many of these recent internet IPOs are money losers. Consequently, more than a few are fighting to float above their issue price. Yelp blasted onto the market and at one point surged over $10 past its $15 debut, but since then has fallen by almost an Abe Lincoln to $21.74. Groupon, meanwhile, is off nearly $2 from its $20 issue price.
The non-tech IPOs don’t get as much coverage, since much of their business takes place outside of cyberspace. Like the techs they’re a mixed bag in terms of share price performance, with a couple of duds and a stud or two. Recent market arrival Proto Labs (NYSE: PRLB) has the great advantage of being a niche firm operating behind high barriers to entry – it produces molded plastic parts on demand and can deliver them to clients within hours, if need be. Unlike a great many tech IPOs, PRLB is a profitable company, netting $9.3 million in 2011 on revenue of $98.9 million. This represented growth of 52% and 111%, respectively, over the tallies of the previous year. Investors have rewarded this encouraging performance by trading up the shares of the company; PRLB stock now stands at $34.49, more than double its issue price.
Shares of casino operator Caesars Entertainment (NASDAQ: CZR) haven’t leaped quite as high as those of Proto’s, but the stock’s not doing badly. At the moment it trades at $12.99, almost $4 over its issue price for a nice premium of 44%. If only the company’s financials matched the upward trajectory of its stock; CZR has been loss-making for some time and its revenues are largely stagnant, despite the improving economy and the many well-situated properties it operates.
Finally there’s Zipcar (NASDAQ: ZIP), a car hire company attempting to carve out a niche in the short-term rental market. Short-term has the potential to turn a profit and ZipCar has been (slightly) in the black lately, but this is a capital-intensive business. More of a concern is the ever-looming threat of heavy competition -- if the company gets too big and successful, giant rivals like Hertz and Avis will try to grab a piece of the action. Like many of its online and offline IPO classmates that came to market in the past year or so, ZIP’s share price zoomed ahead (by over 50%) on its first day of trading. Those days seem to be over for now, as the stock now trades at $14.30, or $3.70 below issue price.
That’s all for this edition of our look at recent non-tech IPOs. Next up, we’ll take a look at a few others and see how they’ve done now that they have at least a few months of trading history behind them. You can read part 2 right over here.
Motley Fool newsletter services recommend Zipcar. The Motley Fool owns shares of Zipcar. Eric Volkman has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
