Based in Austin, TX, RetailMeNot (SALE) scheduled a $191 million IPO with a market capitalization of $1 billion at a price range mid-point of $21, for Friday, June 19, 2013.
Six other IPOs were scheduled for the week of July 15. The full IPO calendar can be found at IPOpremium.
- S-1 filed July 8, 2013
- Manager, Joint Managers: Morgan Stanley; Goldman Sachs; Credit Suisse
- Co Managers: Jefferies; RBC Capital Markets; Stifel; Blair
Note: same lead managers as Facebook (FB)
SALE is in the digital coupon business, where there are no barriers to entry. Digital coupon competitors include Groupon, LivingSocial, OpenTable ad many others.
SALE's revenue growth was flat, comparing Q2' 13 with Q1' 13: that's a very bad sign.
Even worse, profit declined 39%, comparing Q2' 13 with Q1' 13
annualizing Q1 '13
This stock may be okay for a trade, even though sequential quarterly revenue growth is zero, and profit declined 39% in Q2 vs Q1. The last time a 'hot' IPO had this kind of sequential quarterly progression was Facebook (FB). To put the above conclusions and observations in context, the following is reorganized, edited, and summarized from the full S-1 referenced earlier:
There are no significant barriers to entry in the digital coupon space.
Post-IPO Voting Power
Entities affiliated with Adams Street Partners, 5.1%
Entities affiliated with Austin Ventures, 25.4%
Google Ventures 2011, L.P., 4.1%
Institutional Venture Partners XIII, L.P., 6.3%
Entities affiliated with J.P. Morgan, 12.5%
King Holdings (Vic) Pty Ltd , 5.2%
Entities affiliated with Norwest Venture Partners, 16.3%
Use of Proceeds
Half of the stock being sold is by VCs and insiders. That's a red flag. SALE itself expects to net $85.5 million from its IPO. $52.5 million of SALE's IPO proceeds will be used to pay accumulated and unpaid dividends: that's also a red flag.
Disclaimer: This SALE IPO report is based on a reading and analysis of SALE's S-1A filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.