|
|
|
|
|
Explosive growth |
|
Deep frontend losses |
|
Unproven business models |
|
Unbounded uncertainty |
|
|
|
|
|
|
|
|
Average 1st day pop (FDP)= 77% |
|
56% of 1st day to companies
44% to mgnt & investors
$27 billion left on the table ‘90-’98 |
|
8% gain from 1st day to 11/30/99
Roughly 2X IPO price
If FDP>60% => worst performers |
|
|
|
|
133 IPOs since Netscape in ‘95 |
|
Market cap. = $410 billion |
|
Revenues = $15.2 billion |
|
Losses
> $ 3 billion |
|
Only 22
of 133 profitable |
|
|
|
|
Revenues
$ 5.7
million |
|
Cost of Goods Sold $13.4 million |
|
Marketing Expenses $42.0 million |
|
|
|
|
|
Rappaport (WSJ)
Consensus
48% 2000-2004 |
|
Step-up to
55% 2005-2009 |
|
2009 Endpoint $105 billion |
|
Pretax Op. Margins 8% |
|
Perkins & Perkins (Internet Bubble)
94%
CAGR … 5% pre-tax, 20% ROIC |
|
|
|
|
|
|
MotherNature.com |
|
$42 million => $17 million |
|
WebVan |
|
$34 / share => $9
(below last
private round) |
|
Peapod |
|
$52 million => oops |
|
|
|
|
NASDAQ down 7.6% … ~$500 billion |
|
NYSE up ~$213 billion to $4.12 trillion |
|
DJIA up 2.8% … ~$125 billion (excl. MSFT) |
|
MSFT down ~$75 billion |
|
S&P 500 up ½% … 40% tech, 60% other |
|
GE back to #1 in market cap … ~$525 billion |
|
|
|
|
|
|
|
|
AOL 32% |
|
YHOO 36% |
|
EBAY 44% |
|
AMZN 45% |
|
ARBA 52% |
|
|
|
|
|
|
While the fundamental laws of economics and
finance may occasionally be temporarily suspended, they’re unlikely to be
repealed |
|
Eventually, expectations converge on reality |
|
Over time, a company’s fundamental profit
performance drives its share price |
|
Investing in companies, not stocks |
|
|
|
|
|
|
|
|
Net Stocks |
|
Distant, uncertain returns
Certain
short term losses |
|
Structural advantages
Tax-free zones |
|
Very low WACC’s
Where’s the risk
adjustment? |
|
Relatively low capital
Returns
pocketed, not invested
Shifts vs. eliminations (e.g. AMZN) |
|
Cheap currency for funding growth
At
least for now … |
|
|
|
|
|
|
|
|
|
|
Heroic performance bogeys |
|
High burn rates: marketing, R&D |
|
Dependent on external financing |
|
|
|
|
|
|
|
|
|
Rappaport (WSJ)
Consensus
48% 2000-2004 |
|
Step-up to
55% 2005-2009 |
|
2009 Endpoint $105 billion |
|
Pretax Op. Margins 8% |
|
Perkins & Perkins (Internet Bubble)
94%
CAGR … 5% pre-tax, 20% ROIC |
|
|
|
|
|
|
MotherNature.com |
|
$42 million => $17 million |
|
WebVan |
|
$34 / share => $9
(below last
private round) |
|
Peapod |
|
$52 million => oops |
|
Notes