With the economy rebounding, is there any surprise that the world of social media might be primed to take a run on the stock markets? While a 140 banks were forced to close in ’09, 140 characters became the digerati’s new mantra. Where were you when Google and Apple went public? Sitting on the sidelines? Might be time to keep your ear to ground and listen to the growing digital drumbeats signifying that IPOs could be right around the bend.
Here is my list of Top Social Media IPO Contenders for 2010 or 2011. Please take our POLL at the end of this blog and let us know your favorite(s).
1- Facebook
Most imminent to tread the IPO waters is Facebook. The mega-social networking site that reached another milestone with 350 million users last month has also eclipsed its former rival network in ad revenues. According to a eMarketer report, it will surpass MySpace in ad revenues in 2010 when brands are expected to spend $605 million on Facebook versus $385 million on MySpace.
But more important than ad spend is Facebook’s recent ‘dual-class’ stock structure that is making sure that the founders retain control of the company. With Class A and Class B shares, it appears that Mark Zuckerberg is protecting himself and his inner circle from the yielding the floor to outsiders if and when the company goes public. Google (GOOG) structured a similar deal for themselves prior to be listed on the NASDAQ.
A Wall Street Journal report says that, according to its sources, all current shareholders would be converted to Class B shares, which carry 10 times the voting rights of Class A shares. Based on this re-org taking place in late November, the company may be waiting till Q1 of the New Year to issue an IPO. Having raised $600 million in capital from investors over the past five years, with the most recent coming from Russian investor Digital Sky Technologies for $200 million, "there are plenty of stakeholders among the gawkers," notes Tom Johansmeyer in a BloggingStocks.com report.
2- Twitter
Twitter, the 140-character wunderkind has rallied from the depth of criticism that it didn’t know how to monetize one red cent to striking a lucrative deal with Google and Bing with just two strokes of the pen. Citing anonymous sources, Business Week reported the company received $25 million from syndication deals with Google and Microsoft that allow those companies to post tweets in real-time on their search results. Coupled with raising a whopping $250 million at a $1 billion valuation and striking a deal with Mixer Labs and its GeoAPI service to develop location-based applications – can an IPO be far behind? While Twitter is a very methodical and financial savvy company, my thought is they will continue to ramp up their geolocation technologies in 2010 – and hold out for an IPO roll-out until 2011.
3- LinkedIn
In a recent Reuters report
one of the largest business-related social networks is mulling over the
idea of an IPO. LinkedIn, with 53 million members worldwide is seen as
a strong IPO contender and a Reuters poll found it one of the Silicon
Valley’s most eligible to go public.
Valued at $1 billion, the
firm backed by Goldman Sachs, McGraw Hill, SAP Ventures and Bessemer
Venture Partners raised $76 million in its last funding in 2008. While BloggingStock.com
affirms that an IPO is part of co-founder Reid Hoffman’s exit strategy,
Hoffman sees an IPO as inevitable but is also not tying himself to a
specific date. "Probably at some point a balance will occur when that’s
the right thing. (But) that will not occur in the near term," Hoffman
said at a London event to celebrate the network’s reaching 3 million
users.
4- Yelp
In my previous blog, "Will Google Purchase Yelp To Create Its Own Foursquare," I felt strongly that Google was coveting this acquisition
to get a more solid foothold in the location-based service space – a
nut it hasn’t been able to crack (even with its own LBS Latitude).
While such a marriage would have added to Google’s stock price, now it
appears that Yelp might be prime to go public on its own. In order for
Yelp’s founders to walk away from a $500+ million deal with the social
engine giant, this does seem to indicate that the shareholders of this
local community Web powerhouse might be seeking an IPO opportunity, in
advance of Foursquare gaining any more ground in geolocation technology
– which, if that happens could undermine its chances.
5- Zynga
One
of the more controversial IPO contenders is Zynga. On December 16,
Russia’s Digital Sky Technologies which has a stake in Facebook (see
above), and other investors have bought $180 of securities in social
game company Zynga according to Chief Executive Mark Pincus. Industry analysts
have speculated that Zynga could raise $1 to $1.2 billion in an IPO.
Zynga makes games played by members of Internet social networks like
Facebook an MySpace, and profits by selling add-on tools and "virtual
goods." In my blog, "Scamville? A New Online Game? Who’s Up For The Challenge?" I followed up Techcrunch’s Michael Arrington’s harsh criticism of Zynga’s "scam-laden lead gen-type offers." This was followed up by a Time Magazine expose’ in November titled, "Troubling Rise of Top Game Company."
But
as we all know, controversy is good for a company that is looking to
scale its membership base quickly. And as of September according to
both Inside Facebook’s AppData and Developers Analytics, Zyngas boasts 129 million active users across its portfolio of more than 30 games.
The
list above are the most likely to go public if the economy continues to
stabilize. Other social media companies which might tap the public
markets include YouTube, Delicious, Digg, StumbleUpon, Flickr and
Technorati.
Now, do take our Top Social Media IPO Contender POLL
(below) and let us know your favorite(s). You can vote for more than
one or ALL or NONE. Or if we left one out that you think will
definitely go public in 2010, please list it in the COMMENT section
below.
Happy Investing!
