Vonage IPO Views

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:

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Hi Rich,

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

  • robert king
    May 12, 2006 at 3:20 pm

    i think it is a good idea what vonage is doing i love the phone service. and when it is time for me to buy stock i will.

  • voip
    May 17, 2006 at 7:18 am

    i was just wondering whether the vonage ipo gonna click. i beliieve its is doomed

  • Rich Tehrani
    May 18, 2006 at 4:46 pm

    Why would you say that? It could do very well. You have info you want to share?

  • W.E. BUNING
    May 27, 2006 at 12:28 pm

    I have been a Vonage Customer and from the way they handle their accounts there is no way I will invest in this company. The basics tells me that “Poor service translates to bad business”. Avoid getting burned!

  • Rich Tehrani
    May 27, 2006 at 10:00 pm

    I have heard more good than bad about their service. I wonder what others think. I was one of their first users and back then the service was amazing as when you called you had access to the actual tech team. I can imagine over time how it must be difficult to duplicate this service level.

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