Bloomberg News

Kayak Said to Postpone IPO Following Facebook’s Tumble

May 30, 2012

The Facebook opening of the first Middle East and North Africa office at the Armani hotel in Dubai. Photographer: Kamran Jebreili/AP Photo

The Facebook opening of the first Middle East and North Africa office at the Armani hotel in Dubai. Photographer: Kamran Jebreili/AP Photo

Kayak Software Corp. is delaying its initial public offering following Facebook Inc. (FB:US)’s post-IPO descent, according to a person close to the situation.

The Norwalk, Connecticut-based online travel service has postponed the roadshow for the offering, which was scheduled to start last week, said the person, who declined to be identified because the information is private. Morgan Stanley, the lead bank on Facebook’s initial share sale, also was hired to lead Kayak’s IPO.

Kayak would have been the first U.S. Internet offering since Facebook went public in the biggest technology IPO on record this month. The social network has dropped 26 percent since its market debut, extending its losses in the worst- performing large IPO in the past decade. Investors are pummeling the stock amid questions about Facebook’s growth and how underwriters managed the share sale.

“After Facebook’s tumble, investors are not willing to buy pie in the sky,” said Francis Gaskins, president of Marina Del Rey, California-based researcher IPOdesktop.com.

ServiceNow Inc., an IT cloud-computing services company, and Palo Alto Networks Inc., an Internet security company, both planning IPOs led by Morgan Stanley (MS:US), are on track to go public, said people familiar with the situation. Pen Pendleton, a spokesman for Morgan Stanley, declined to comment.

Mike Haro, a spokesman with Palo Alto Networks, and Rhett Glauser, a spokesman with ServiceNow, didn’t immediately respond to requests for comment. Jessica Casano-Antonellis, a spokeswoman for Kayak, declined to comment.

Slowing Growth

Facebook’s investors are concerned about the company’s prospects after first-quarter profit decreased on slowing sales growth, and some shareholders have filed lawsuits alleging that the biggest social network and its underwriters overpriced the stock at $38 a share. At that price, Facebook had a higher price-to-earnings multiple than 99 percent of the Standard & Poor’s 500 Index.

“Facebook makes money but it seems their wheels came off their growth expectations and investors are hungry for tech companies with high growth margins,” Gaskins said.

Facebook closed at $28.84 yesterday, slipping below $30 for the first time. The stock fell 2.3 percent to $28.19 as of 4 p.m. New York time.

Kayak first filed to go public in November 2010 and put its plans on hold earlier this year because of choppy market conditions. The company said this month it posted a profit of $4.15 million in the quarter that ended March 31, compared with a loss of $6.91 million in the year-earlier period. Revenue rose 39 percent to $73.3 million.

VKontakte, the largest Russia social-networking website, has shelved its IPO indefinitely after Facebook’s offering hurt investor demand, Pavel Durov, founder and chief executive officer, said yesterday on his Twitter account.

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net.

To contact the editor responsible for this story: Katherine Snyder at ksnyder@bloomberg.net.


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Companies Mentioned

  • FB
    (Facebook Inc)
    • $61.36 USD
    • -1.67
    • -2.72%
  • MS
    (Morgan Stanley)
    • $31.04 USD
    • -0.16
    • -0.52%
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