The Vonage IPO is faltering, trading at $15.10 or $1.90 below the opening $17 price. This is a 11% price drop. I just did a Yahoo! Quote lookup and pasted the chart to the right. Not looking good even though it has ticked up a bit. Too bad Skype didn't do an IPO instead of selling to eBay. Now that would have been an IPO that would have rocked the VoIP world and perhaps setup Vonage for a much better IPO performance.According to the WallStreet Journal, "If the stock's losses remain at this level, it will be the worst IPO debut since wireless equipment maker Gigabeam Corp. lost 21% on its first day of trading in 2004, according to data tracker Thomson Financial."
I'm not one to say I told you so, so I won't. Many in the VoIP blogosphere called this Vonage IPO failure, so I'm not the only one. The stock stading day is still young, so it's possible Vonage could rebound. Although I have access to the Vonage IPO since I am a customer, I'm passing on this one.
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To all those out there who were going to invest and get out the same day and make a little cash... I bet you're glad you didn't!
And... you haven't seen nothing yet. I predict Vonage stock will continue to dwindle, and expect it to trade near $10 within 1 week.
So... why did Vonage IPO when they had to realize it was going to be a disaster? They didn't have much choice. They were hoping they were going to get bought like Skype... Didn't happen.
They were hoping they could continue to get private funding from companies or investors wihtout common sense.... Didn't happen.
They NEEDED money from an IPO to maintain capital investments in more marketing and customer acquisitions. Well, with the stock faltering, and there stcok will be probably be downgraded upon 1st review, I think their cash assets will start drying up fast.
Don't be suprised if you stop seeing the barage of tv adds start to dwindle.
So... what would be the smart thing? Completely rehaul their add campaign. Mimc something along the lines of 8X8, which would significantly cut their acquisition costs from $600+ a customer, to less than $200 a customer, show they can make a profit, investors will be back in, they'll show an actual profit model, and their stocks may go back up. With a still relatively low stock price (by the time all is said and done - maybe $5 - $7 a share), and soon close to 2 million customers, they may finally get the company acquisition they were hoping for, which would also boost their stock, and EVERY BODY WINS.