May 23, 2006

To Vonage or Not? 1999 Redux

You know you're in a period resembling a bubble when companies that have a long history of consistent losses, without end in sight, who pride themselves on cost per acquired customer, are thinking of going public and raising ungodly amounts of money. You also can tell that the bubble period is upon you if you're actively considering putting money into the IPO on the first day "just in case".

Such is the case with the latest IPO du jour, Vonage, who raised more than $500 million after pricing its initial shares at $17 apiece. The VoIP specialist is looking to go public tomorrow, and hopes that its stock echoes the meteoric rise of Google and Baidu, rather than the sinking lead balloon of so many others.

Critics far and wide have criticized Vonage's model, saying the company doesn't offer unique differentiation over services such as Skype, yet somewhere out there are enough investors to give Vonage what it needs even more than customer growth - $500 million smackers. The only question is - will I too try to cash in on what might be a first day pop, for a stock I have no interest in holding long term? Will I have regrets if I do? Will I have regrets if I don't?

I famously had the opportunity to buy 100 shares of Google at 90 and walked away from the chance. I also flipped Baidu on its first day for some quick money, but was on an airplane when the stock first hit the ticker tape, and missed out on tens of thousands more. But I've also put money into stocks like and Rackable on their first week only to see the trend go down or flat. One never knows, and if we did, the SEC would want to know about it. Keep you posted....

Listening to ''LSG'', by Sasha (Play Count: 4)