May 12, 2006
I have had a few questions regarding the Vonage IPO
recently. One question was at the Aculab Ace event and yet others are verbally or in an e-mail. I responded to one this morning and I believe it may be worth sharing. Again, I am not a certified investment planner but for what its worth, here are my views:
I found many of your articles and blog commentary helpful and enlightening. I thought you might have a thought or 2 regarding the upcoming Vonage IPO. I’m a Vonage customer and, as you’ve probably heard, Vonage is offering some of their customers the opportunity to purchase shares at the IPO price (currently expected at $18-20 per share). I know it’s not the old days of getting IPO priced stock and flipping by the end of the day to make a huge profit, but I’m wondering what your thoughts are about Vonage stock as a VERY short term play. A play of say a day or end of IPO’s 1st day of trading. I’ve read enough to know that it’s really speculative whether the stock will do well long term due to its mounting expenses and cost of customer acquisition, but putting that aside, wondering if you think the stock will end trading higher than the initial IPO price.
Obviously this is just your informal opinion.
Thanks in advance.....
Here are some thoughts:
Vonage has told Wall Street they aren’t worrying about profit now
Wall Street hates companies that don’t focus on profit
The Institutional investors may avoid this IPO due to the fact that Vonage is focusing on market share and not profit
The Individual investor could drive this stock up for an initial pop
If this happens the stock may have high levels of volatility for a while
In the end, emotion seems to rule on Wall Street. Regardless -- my thoughts should be taken as solely my opinion and not investment advice you can bank on