Will Classmates.com Have A Successful IPO?
Posted by Nick O'Neill on November 28th, 2007 8:00 AMClassmates.com is preparing to be the first social network to ever file for an IPO. The company is expected to raise between $120 and $144 million when they go public. That’s pretty good for a company that lost close to $2 million last year and close to $8.2 million the year before. While it appears that the company is on track to soon move into the black, much of the money being raised will be used to pay of the significant debt that the company has amassed in growing their user base.
Classmates.com may not be the hottest stock though. While their user base has grown, Compete.com shows that the number of active users each month has stayed relatively stagnant over the twelve months ending in October of this year. Back in February, Classmates.com was roughly the same size as Facebook in terms of active users. Since then Facebook has doubled in size while Classmates.com has apparently grown by a marginal amount.
I would guess that the investors are looking for a way to wipe out their debt and reduce their overall risk exposure. I’ve never been a member of Classmates.com but then again I’m not a member of their target demographic. Additionally, Classmates.com has lost the long-term battle to Facebook who has more than 90 percent of all university students registered on their site. Would you buy Classmates.com stock?
November 28th, 2007 at 11:14 am
A little correction: Xing went public. Sure, it’s from Europe, it’s a business social network and it’s quite small compared to the big players, but I think it should count anyway.
November 28th, 2007 at 4:43 pm
Nick, I’m not sure that Classmates.com will be the first ever social network IPO;
http://www.e-consultancy.com/news-blog/362352/web-2-0-company-xing-raises-35-7-million-in-ipo.html
November 28th, 2007 at 4:46 pm
Yeah … I really screwed that one up
That’s what I get for writing a post at 2 am and trusting the article I was reading!
November 28th, 2007 at 5:07 pm
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