Not Much to 'Like' About These Tech IPOs
Newly public social-networking stocks may have come off from their highs, but investors are better-served looking elsewhere for bargains.
In the middle of 2011, the chatter surrounding the upcoming crop of tech IPOs was hitting a frenzied pace. New IPOs from LinkedIn (LNKD) and Pandora (P) were exciting investors, and eyes were turning to the expected debuts of Groupon (GRPN) and Zynga (ZNGA) at the end of the year.
Since then, that excitement has abated somewhat and a wave of skepticism has crept in. There were concerns over Groupon's accounting standards and more broadly of the sustainability of social-networking business models. The worries have kept most of these IPOs underwater from their debuts. So does the slight decline in hype mean that it is a good time to jump into the social-networking IPO game? Absolutely not. The market remains too optimistic about all of these firms' prospects, and investors would be much better-served looking elsewhere in the tech sector for value.
Bearemy Glaser does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.