Today, UNTD is down about 5% as of this post and yesterday it was down about 4% (while the market was up 3%). No major news has broke in the past few days, so it may be investors just taking profits or people thinking the IPO won’t go so well.
UNTD has previously been on a good run and is still up by about 11% over the past 3 months (compared to a break-even S&P 500).
Today, Classmates.com’s parent company United Online (UNTD) disclosed the terms of its IPO. It will issue 12 million ” shares with a price of $10-$12 per share. This will value classmates.com between $600-$720 million!Talk about a social networking bubble. A site, which isn’t making any money (and no reasonable person would expect it to grow in the future) is suddenly worth $600-$720 million. Are we in 1999 again? Granted, I am biased since I am short UNTD and will definitely short Classmates stock when it comes outNo date has been set for the IPO. As someone who is short, I would prefer they delay it as much as possible, so the market as a whole realizes how bad of an investment this site is.In other news, the Federal Trade Commission is looking into Classmates.com’s rebilling/automatic renewal practices. Some customers have complained that they were automatically renewed against their wishes or were somehow unable to cancel their automatic renewals. Classmates.com disclosed that they would lose a material amount of revenues if they had to change their rebilling practices.This is, of course, because their service is basically useless to most people in the facebook/myspace world, so if all of their current customers got around to canceling their subscriptions, they would be screwed since it’s going to be more difficult for them to get new, paying customers.