IPO Silly Season Returning?

from the window-open? dept

While there’s been a lot of talk about a new “bubble” in tech companies, one thing people have noticed is that not too many companies are going public — and the ones that do tend to have a better track record and sometimes (gasp!) they even have profits. However, it is still possible for ridiculous IPOs to occur. Case in point is Digital Music Group. We wrote about its planned IPO last month, and we’re amazed it actually went off. The company hits many of the Bubble 1.0 bad IPO checkmarks: company is less than a year old? Check. Company has almost no revenue? Check. Company is in a highly competitive space with little to no differentiation? Check. Company has huge losses over its short life span? Check. Company is almost totally dependent on one supplier who could cut off its revenue supply easily? Check. Admittedly, the stock did drop a bit in its first day, unlike many of the vintage bubble IPOs, but that just means they scored even more cash than the market actually thinks they deserve. The company has yet to make half a million dollars in revenue, and yet was able to raise $38 million from the public markets. It didn’t get that much press coverage, but it’s a warning that crazy season may be returning on Wall Street.

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “IPO Silly Season Returning?”

Subscribe: RSS Leave a comment
Stu says:

IPO Silly Season Returning?

Digital Music Group not profitable? How about $38,000,000.
The people who founded and brought Digital Music Group to this IPO are geniuses.
Was Wall Street crazy? Nope – they made plenty bringing the IPO to market (fees, etc) and by selling their own shares at a profit – fast (that little decline in stock price).
The only crazies are the “civilians” who bought the stock and are still holding it.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...