People want in on these IPOs.
They will want Millennial Media (MM), which is a money-losing, but fast growing mobile media advertising play. They want Cafepress (PRSS), which is an outfit that can personalize cups and t-shirts and pretty much anything else you want.
They wanted Annie's (BNNY), the profitable natural food snack company, yesterday, and Vocera (VCRA), the healthcare mobile specialist, which has doubled its sales but is still incurring losses.
Why do they want these?
They want in because they have figured it out. Wall Street is pricing deals well for the buyer, not the seller. It is one of those moments where Wall Street wants you to win and when they come along it is pretty imperative that you don't miss them.
Once the appetite is whetted, many buyers aren't going to be that discerning. For example, Cafepress seems like what I would call a barely-e-commerce play. Customers can make personalized drinkware and apparel. They have tons of new designs. According to the company 135,000 get added each week. Cafepress.com is a real popular destination. It has 15 million members and 3 million shops. It is the No. 1 player in this promotional product industry, with dominant share in t-shirts, calendars and wall art, among other places people want to put logos and brands and names under. I know if I wanted to do a "Mad Money" t-shirt I would most likely go to this site.
All that said, it's got a high trailing 12-month price-to-earnings multiple and had a cyclical downturn in 2009. Revenues dropped from $120 million in 2008 to $103 million in 2009. It is highly seasonal and has made a host of acquisitions to accelerate growth. It has sales of $175 million in 2011. Insiders are selling 44% of the deal. It's been kicking around since 1999, and while it is profitable, making $3.6 million last year, that is only up 8% from 2009.
In other words, it is not a barnburner.
Why point all of this out? Because when the animal spirits get going for IPOs, stocks like Cafepress get interesting.
We will hear all about froth if this deal is a good one.
To which I say, we haven't had any froth around here in ages. Let these things rally and take off for as long as the underwriters keep pricing them under demand and only when they begin to raise the prices and make the deals less tight can we pronounce the market dangerous.
Right now, after the success of the past few deals, let's just call it lucrative.