If deemed successful by Wall St. standards, Classmates.com’s planned $125 million IPO could serve as a bellwether for other social nets, ushering in a potential wave of stock plays by the likes of Facebook and LinkedIn, according to a long analysis by The Hollywood Reporter. Back in March, Michael Birch, the CEO of UK social net Bebo, told Silicon.com he’d rather work towards doing an IPO as opposed to a private sale, a comment THR picked up on. While the credit crisis has many expecting a greater degree of caution on the part of investors, the accelerating growth social nets have achieved lately have made these companies more attractive.
By itself, however, Classmates, which is owned by United Online (NSDQ: UNTD), is unlikely to spur much excitement about a greater movement of social net IPOs. As one market observer tells THR, while the site’s growth is clear, users don’t have a real incentive to visit it on a daily basis. That could certainly limit its revenue prospects in terms of driving greater spending by advertisers. Therefore, the concentration will become more intense on when or whether sites like LinkedIn and Facebook will decide to go the IPO route. So far, LinkedIn looks like the better bet. But the feverish speculation has been aimed at Facebook.
Aside from a recent membership burst, some of the circumstantial evidence being cited for the heightened expectations of a stock offering is the hiring last month of former Yahoo and YouTube finance executive Gideon Yu, despite the demurrals regarding an imminent IPO by Mark Zuckerberg, Facebook’s founder and CEO. That has not stopped investors from offering their guesses of when Facebook would file an IPO. Cody Willard, a hedge-fund manager who focuses on telecoms, told THR that Facebook’s public float value on Wall Street will exceed $1 billion, while John Keeling, a senior VP with the Motley Fool investor service, notes that the company has no reason to rush it.