This has been a busy year for tech IPOs. Linkedin (LNKD) and Yandex (YNDX) were two very large tech IPOs that drew a lot of attention. The buzz from these stocks seemed to help other tech IPOs which traded above the original offering price but have had varying levels of success since then. Here is our analysis of four of this year’s tech IPOs.
Zillow Inc (Z) Zillow, Inc. provides real estate information online through its website zillow.com. The online real estate company provides provides real estate information on 100 million homes and real estate properties in the United States. The company uses its website and mobile applications to disseminate information about homes and real estate listings and mortgages. The company also provides a way for home homeowners, buyers, sellers, and renters to contact real estate agents and mortgage officers.
Zillow Inc has a market cap of $506.26 million and is currently trading at $36.43. The company went public on July 20, 2011. The initial offering was for 3.46 million shares at $20.00. The stock opened at $46.56. This was quite a good start for the stock as it was first proposed to start trading in the $12.00 to $14.00 range. The company has increased revenue from $17.49 million in 2009 to $24.61 million in 2010. Operating income has improved from -$12.97 million in 2009 to -$6.84 million in 2010. The company had 17 million users in the month ending March 31 2011. This was an 86% increase from March of 2010.
This company has had a 63% annual growth rate over the last 4 years. It is run by a team that helped create the successful travel website Expedia. Zillow Inc. stock has had a successful introduction to the Nasdaq (NDAQ). Zillow has not yet turned a profit but if the company can continue to increase its user rate and grow revenue it should be a successful IPO. I rate Zillow Inc. as a BUY.
Linkedin Corporation (LNKD) LinkedIn Corporation is an online company that sells advertising and offers job recruitment and job posting services. It also provides a social networking service that allows professionals to share knowledge and find business opportunities. Linkedin is free to join but charges a fee for members who want premium tools and services.
Linkedin Corporation has a market cap of $9.55 billion. The company went public on May 19, 2011 with an initial offering of 7.84 million shares at a price was $45.00. It opened at $83.00 and is currently trading at $100.95. The stock has traded between $60.14 and $122.70.
The site has reached more than 100 million users since it was launched in 2003. The growth in its monthly visitors has grown from around 4.5 million in 2007 to 50.5 million in 2010.
The problem with Linkedin is that the stock has a P/E of 1,160. Also the company faces intense competition from successful companies such as Monster Worldwide, Inc. (MWW), in the recruitment service market, and Facebook, Twitter, Google (GOOG) and Yahoo (YHOO) in the social networking and online advertising businesses. Linkedin is a strong company with a good business model. However with a P/E of 1,160 I think that the stock is overpriced. I rate this stock a Hold.
Yandex N. V. (YNDX)
Yandex N.V. has been called the Russian Google.
The company operates an internet search engine in Russia that provides online information, email, websites, and other internet services.
Yandex has a market cap of $12.19 billion. The Netherlands based company’s initial offering was on May 24, 2011. Yandex was the largest tech offering since Google in 2004. The company offered 52.17 million shares at $25.00. The stock opened at $38.50 and is currently trading at $38.46. This company dominates the Russian search engine business with a 64% market share. It brings in more revenue than any other Russian internet company. The company made $440 million in 2010 which was a 43% increase from 2009.
In spite of Yandex’s positive growth outlook there are reasons to be cautious about the stock. For one the political backdrop in Russia is too unpredictable for many American investors. My second concern is that this stock has a P/E ratio of 79.03 and is trading at a higher valuation than Google. I would be careful about buying this stock at its current price. I rate this stock a Hold.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.