Who Wants A PayPal IPO?
from the e-fish-out-of-e-water dept
Amazing, but true. It looks as though PayPal might actually go through with their IPO this week. It seems that everyone in the internet world is watching this one carefully to see if it goes anywhere. It has all the hallmarks of a dot com issue from years past: it's an internet only business, revenue has been growing - but just as quickly as their losses pile up. A few years ago this would have been a huge IPO, but today people just aren't sure. I'm still surprised that someone didn't just buy them up. I think, as part of a larger offering, it could make sense - but it's not clear how profitable the company will be on its own. They're going to have to keep adding in various fees and such, and every time they do, they're opening up more room for larger, more well financed, competitors to take some of their market. Of course, since when have fundamental business principals had anything to do with how well a company performs in its IPO?
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See It Coming
Despite the fact that it looks like an e-fish out of water, Fitzgibbon predicts that PayPal will see some small gains in first-day trading. He attributes this forecast less to the fundamentals of the company than to the assumption that the investment banks underwriting the offering, led by Salomon Smith Barney, have done their research.
Uh, I hate to break the news to John Fitzgibbon, editor if IPOdesktop (whatever that is), but investment bankers underwrite IPOs when they smell a buck, not when the company is any good. Hasn't everybody learned that one yet. The main "research" I would expect is being done at SSB is to determine whether there are enough "greater fools" out there to buy into this.
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While there are cheaper services, none has been nearly as successful as PayPal in getting customers to sign up. Buying PayPal gets all of those customers in one shot.
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I just think that now would be the time for PayPal to sell out simply because their advantage isn't sustainable in the long run, but could be very helpful for a larger company right now - to bring in the customers which they could hopefully keep through their other services.
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1) make arbitrarty company
2) do IPO
3) cash out your shares
4) golf till death
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