Alloy Online -- another community for Generation Y -- goes public today and if it flops the company can send iTurf (Nasdaq: TURF) a cynanide-laced gift basket.
Wall Street bought into all the Generation Y buzzwords before with iTurf, but got burned (chart). Investors may not give Alloy Online a fair chance.
Alloy Online (proposed ticker: ALOY), which offers a similar service to iTurf, priced its 3.7 million share offering Thursday night at 15. The price range was $12 to $14 a share. Shares trade later today.
| Alloy Online: Better bet than iTurf? |
To understand how Alloy Online could get TURFed you have to look at some recent iTurf history since its IPO. iTurf, a unit of Generation Y retailer Delia's (Nasdaq: DLIA), went public as an iVillage for teens. The theory went like this: iTurf can use sites like gURL.com to hawk clothes. Content, community and commerce -- this stock was going places. Or so it seemed.
Parents, however, can be a drag. Just weeks before the iTurf IPO Delia's said its fourth quarter was strong. Once iTurf debuted with an IPO that topped out at 66, Delia's confirmed its strong fourth quarter earnings, but happened to mention the first quarter and future quarters could be weak. Delia's and iTurf are very close since the Web offspring bought $13 million in Delia's stock at the IPO.
The end result? iTurf has been halved from its high and investors are still peeved (Stocktalk). iTurf did net a slight gain from a recent bogus pact with America Online (NYSE: AOL), but it's still in the Internet IPO basement.
Note that iTurf is a different situation, but the Generation Y aftertaste is still there.
Alloy Online provides community and free email with the goal to sell stuff. The prospectus starts out with a few Generation Y testimonials.
"Hey Alloy! You guys totally rock. You've got my surf gear, my fave lip gloss and those butterfly clips i dig!"
Alloy is looking to capitalize on the 56 million boys and girls between the ages of 10 and 24. That population has $250 billion of annual disposable income.
Once you divvy up the stats, Alloy Online and iTurf are about equal. Alloy Online reported 1998 sales of $10.2 million, up from $1.8 million in 1997. Alloy gets nearly all of its revenue from merchandise sales. The company reported a 1998 loss of $6.4 million compared to $1.9 million in 1997.
Alloy had about 25 million page views in March, up from approximately 1.5 million in March 1998.
In comparison, iTurf had 35 million page views in February, but trailed Alloy in sales. iTurf, however, got a later start than Alloy.
Both Generation Y e-tailers want to sell sponsorships and ads, expand internationally and grow their respective brands. Both see losses for the foreseeable future and have a database of demographic information.
Wall Street may find itself asking if the world needs another Generation Y e-tailer. If that's the case, look for the Alloy Online IPO to be TURFed.