Nov
17
Comeback or false hopes?
Posted by: Paul Dhaliwal | November 17, 2011 | Leave a Comment
Encouraged by the success of Groupon’s debut, Angie’s List, a reviews site for local services such as home repair and catering, is going public on Thursday. Its IPO is relatively high, at $13 per share. Evelyn Rusli, a New York Times’ correspondent who blogs about IPO’s and offerings, believes that internet start-ups are making a comeback into public markets.
The confidence that underwriters Merril Lynch and Bank of America have shown by taking the option of selling 1.3 million of Angie’s Lists’ shares is a positive indicator for market speculators. Also, Fox Network endorsed the company by holding an interview with the founder, Angie Hicks, as can be seen in the following video.
However I would not say that these successes merit speculative confidence, as shaky economic conditions can propel shares prices either way. Speculators would be wise to do their own research, and not rely on venture capitalists’ hopes. Such trust would have proved disastrous in the case of Clovis Oncology, a maker of cancer drugs that posted a loss on its first day of being traded publicly.
Although Internet start-ups may be achieving some successes in the public trading market, investors would be wise to keep an eye out for intangibles such as Europe’s tumbling economy.