Technology is alive and well, and the sector's IPO market is ready to
heat up, writes David Sterman for MSN
A strong stock market is setting the stage for more technology firms to go public. These companies should be on radar screens of tech investors.
As long as the market avoids an air pocket in 2013, the coming year could
prove to be a very active period for IPOs. Indeed, we're off to a good start:
There have been $5 billion worth of IPOs completed thus far this year, according
to Dealogic. The tech-heavy slate of upcoming IPOs is being led by the debut of
an online money-transfer service that was the first tech IPO of
Here are ten other fast-growing tech companies being cajoled by investment bankers to take the plunge. A few of them may end up in your portfolio before the year is out.
Strong growth can yield robust valuations, and signs are emerging that Twitter will pull off an IPO in the next 12 months, valuing the company at more than $10 billion. Various reports suggest that Twitter had nearly $300 million in sales in 2012 and is likely to double its sales base in 2013, setting the stage for more than $1 billion in revenue in 2014.
For comparison's sake, Facebook (FB) is valued at roughly ten times projected 2013 sales of $6.65 billion. A key difference: Facebook has numerous ways to monetize its platform, while Twitter's business model has fewer tools through which to monetize. Still, international expansion, further inroads with corporate branding efforts, and mobile tweeting are the main growth drivers of the platform.
In some respects, Twitter is racing against the clock, because growth will
eventually slow (as the "laws of bigness" kick in), and a $10 billion IPO will
be hard to pull off if Twitter's growth rate starts to
Kevin Ryan was the driving force behind the online advertising juggernaut DoubleClick (which was sold to a private-equity firm in 2005 for $1.1 billion). A couple of years later, Ryan launched Gilt Groupe, an e-commerce Web site focused on instant "flash" sales. With more than 6 million members and more than $600 million in gross annual sales, Gilt now appears to be preparing to go public.
The company recently hired a new chief executive to take the reins from Ryan. Michelle Peluso, who was an executive at Travelocity and Citigroup (C), is expected to bring a bit of seasoning to Gilt before the company undergoes the scrutiny that a public debut entails.
Roughly a year ago, Pinterest, provider of social-sharing services, was getting ample IPO buzz. The company's user base was growing quickly amidst a wide range of gushing media profiles.
The company's site had 11.7 million unique users by early 2012, making it the fastest site in history to break through the 10 million unique visitor mark, according to Comscore.com. A year later, that figure has reached 48 million. By March 2012, Pinterest was considered to be the third most-popular social media Web site, behind Facebook and Twitter.
A capital injection in May 2012 valued Pinterest at a lofty $1.5 billion. But since then, talk of an IPO has quieted. The rumor mill suggests that the company needs to start posting impressive revenue growth rates that the IPO market craves. In the next few months, Pinterest is expected to complete another round of private financing, but later in the year, the pump may be primed for an IPO.
Risks to consider: Highly anticipated IPOs don't always live up to their hype, as we recently learned with Facebook. It's always wise to research each company and its latest news properly before making an investment.
For the remaining seven upcoming IPOs, read the rest of the story at MSN Money here...