Did Facebook Ruin the IPO Party for Everyone Else?


KayakFacebook's (FB) belly flop of an IPO continues to make waves.

The Wall Street Journal is reporting that Kayak -- the popular travel website that was supposed to be the next major dot-com to go public -- has been slow to get its investor roadshow going.

Kayak has all of the attributes that one would like to see in a debutante. The site that scours a multitude of sources to deliver the best fares and rates for flights, hotel rooms, and related offerings is profitable. Revenue climbed 32% to $224.5 million last year. A whopping 310 million travel search requests were submitted through Kayak during this year's first quarter, 45% ahead of the site's popularity a year earlier.

However, Facebook is a hard act to follow -- and not in a good way.

IPO Friend Request Denied

It's been two weeks since the ballyhooed Facebook debut failed on many different levels.

On the surface, it was a case of sheer underwriter greed. Why should a company that earned $1 billion last year be worth $104 billion out of the gate?

However, the actual exchange made things worse. Nasdaq (NDAQ) mistakes left a lot of buyers unsure if they had been successful in purchasing shares -- and by the time many received their confirmations, the stock was already trading lower. The exchange halts of Facebook sympathy play Zynga (ZNGA) did little to restore the confidence of individual investors.

If investors can't trust underwriters to establish fair dot-com valuations or the exchanges to execute their orders at a time of heavy volume, why would they rally around the next hot tech company to go public?

It's not just Kayak in a holding pattern.

  • Twitter -- the most eligible private Internet company now that Facebook has gone public -- would have been a slam dunk of an IPO if the social networking giant's deal wasn't crumbling over the past two weeks.
  • LivingSocial -- Groupon's (GRPN) nearest competitor in the daily deals space -- now has two reasons to hold off on going public. Both Facebook and Groupon are trading below their initial price tags.
  • Pinterest, Foursquare, and Tumblr are just some of the online speedsters that will probably now have to wait until the bad taste that Facebook IPO's has left in the market's mouth goes away.

It's going to take a lot of time or some very strong mouthwash to make that happen.

Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Facebook

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