Vonage IPO, Hotter Than MasterCard's? Wait a Minute...
Posted by: Olga Kharif on May 23, 2006
Mention Vonage, and you’ll get opinions as diverse as political views. In today’s BusinessWeek story, Peter Elstrom shows that the Web-calling company’s future is uncertain, and its shares, being priced today, are risky.
And yet, a poll on IPOHome.com (it’s in the bottom left corner of the page) shows that more investors think this IPO is hot than those interested in MasterCard. In fact, far more people in the poll voted for Vonage than for any other IPO currently being priced.
I am struggling to understand the logic here. Investors were decidedly chilly on shares of other companies being priced: a real estate site, a water infrastructure vendor, among them. That’s all the more astounding considering that, unlike Vonage, these companies actually make money.
Then, there’s the MasterCard enigma. The outfit has been around far longer than Vonage. Unlike Vonage, which is bleeding money, MasterCard actually made $319 million in income in the past 12 months. Clearly, that makes it less interesting than Vonage. Yeah…
Just like my colleague Rob Hof, who talked about Vonage’s bleak prospects here, I just don’t get it. Yes, Web-calling has a bright future. But that doesn’t mean that Vonage does. So, what is going on?