'Faltering' market downs MatchNet IPO
The online dating company cancels plans to sell its shares to the public, citing a weakening market for Net-related stock launches.
MatchNet, which operates JDate.com and AmericanSingles.com, said in a statement that it has called off the initial public offering because of the "faltering market for Internet-related IPOs."
The Beverly Hills, Calif.-based company's chief executive officer and president, Todd Tappin, announced his resignation, also on Thursday. He is being replaced by MatchNet board member David Siminoff.
MatchNet joins a growing list of Internet and high-tech companies that have recently shelved their IPOs. The list includes Claria, a maker of pop-up advertising software, which withdrew its share launch plan this week, and PlanetOut, an online media company targeting gays and lesbians that postponed its stock market debut indefinitely on Wednesday. Nanosys, a nanotechnology company, yanked its IPO last week. Each cited adverse market conditions as the basis of their decision.
Of the 36 stock market debuts cancelled this year, nearly half have been in the last two weeks, said Richard Peterson, an IPO analyst at Thomson Financial. "There's been an acceleration of deals being taken off the calendar," he said.
Reduced offer prices are another symptom of slack demand in the IPO market, Peterson said. Lindows, a Linux software developer, reduced its planned stock price for a second time on Thursday, chopping its anticipated payout nearly in half. RightNow Technologies, which sells online self-service software, dropped its IPO share price just before it began trading last week.
Although each company has its own reason for pulling the offering or lowering the share price, the moves reflect a general disappointment among investors with the performance of IPOs this year---particularly in the Internet and high-tech industries, Peterson said.
Of the 145 companies that began trading their shares publicly this year, 78 are trading below their initial offering price, Peterson said. Technology IPOs have fared worse than average, typically losing 10 percent of share value after the first day of trading, compared with a 4 percent average loss for all IPOs this year, Peterson said.
Bad news about unemployment and disappointing earnings reports from Cisco Systems and Hewlett-Packard may have also sapped enthusiasm for high-tech IPOs in recent days, he said.
Another analyst believes the cancellations reflect the high bar that investors have set for companies seeking to trade publicly. "Each individual deal is going under the microscope," said David Menlow, president of the IPO Financial Network. "It doesn't matter if other deals in that sector did well. Unlike in the '90s, each deal is being evaluated on its own merits."
Google--which many thought would reignite the IPO market with its highly anticipated offering--may also be contributing to current stock launch woes, Peterson said. The upswing in cancelled or postponed IPOs came amid growing skepticism over Google's offering.
"The Google IPO is swimming against a current of bad news," Peterson said. "The deal will get done, but the performance may be less than everyone anticipated. It won't jump-start the tech world."