2012 could be big for Internet IPOs
Facebook is said to be considering an IPO valuing the social networking site at $100 billion. (Dec. 21, 2011) Credit: Bloomberg News
Facebook Inc. and Yelp Inc. are set to help make 2012 the biggest year for U.S. initial public offerings by Internet companies since 1999, testing demand for IPOs after investors lost money on Zynga Inc. and Pandora Media Inc.
With Facebook considering the largest Internet IPO on record and regulatory filings showing at least 14 other Web-related companies are planning sales, the industry may raise $11 billion next year, according to data compiled by Bloomberg. That would be the most since $18.5 billion of IPOs in 1999, just before the dot-com bubble burst.
While surging sales growth may lure investors to Facebook, the biggest social-networking site, heightened stock volatility and Europe's sovereign-debt crisis could temper the pace of global IPOs after a 38 percent decline in 2011. Even Internet companies may cut valuations for their offerings after Zynga, the largest developer of games for Facebook, and online-radio company Pandora slumped following share sales this year, according to Morningstar Inc. research.
"You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market," said David Erickson, New York-based global co-head of equity capital markets at Barclays Plc.
Facebook, based in Menlo Park, Calif., is examining a $10-billion offering that would value it at more than $100 billion, a person with knowledge of the matter said last month. Total sales at Facebook in 2012 may surge 52 percent to 62 percent from this year's projected $4.27 billion through increased ad revenue, according to EMarketer analyst Debra Aho Williamson.
Yelp, the consumer-review website operator, and e-mail marketer ExactTarget Inc. filed for IPOs in November. This year 19 Internet companies generated $6.6 billion in U.S. IPO sales, and overall U.S. initial offerings generated $38.8 billion, about 10 percent less than in 2010, Bloomberg data show.
Tech offerings generally offer real growth, J.D. Moriarty, New York-based co-head of equity capital markets for technology in the Americas at Bank of America Corp., said earlier this month.
