TicketMaster Online-CitySearch:
IPODEX Shows Hot Market Vs. Existing Stocks
Like Scrooge, Internet stocks have been on a wild ride from the ghost
of Christmas past, present and future. This holiday season Wall Street
shopped early (November) for e-tail stocks and now has turned its
fickle attention to Internet IPOs.
The past three Internet stock offers from very different companies have
done well in the aftermarket: EarthWeb, theglobe.com and the latest
reindeer to pull the IPO sled, TicketMaster Online-CitySearch
(NASDAQ:TMCS).
TMCS sold 7 million shares at $14 per share, raising gross proceeds of
$112 million. Of that, $50 million immediately goes to a loan from TMCS
majority equity holder USA Networks, run by Barry Diller of TV biz
fame.
See table at internetnews.com
The ticket seller and local guide firm soars on its IPO December 3
after pricing 7 million shares above range at $14, opening at $52,
climbing as high as $56.375 before closing at $40.25 per share. Volume
is 14.3 million shares or twice the offering. TMCS priced at a 56%
premium to its original target estimate in early filings.
On a fully-diluted basis our analysis shows TMCS at $1.2 billion we
think TicketMaster Online-CitySearch debuted at fully-diluted 22x
estimated 1999 revenue.
At its peak of $56.375, TMCS held a $3.9 billion market cap or about
89x our estimated 1999 revenue for the company. Fully-diluted market
cap pushed the multiple to 139x. By the close of trading its first day
yesterday, at $40.25 per share, TMCS was at 64x next year's revenue.
Just six months ago CitySearch was a standalone firm with its own IPO
plans that would have valued the guide/directory at about 21x our
estimated revenues for CitySearch as our table illustrates:
See table at internetnews.com
Shortly after filing its IPO intentions in May, CitySearch cancelled
its plans, merged with USA Network's TicketMaster Online this Fall and
the combined entity stepped up to the plate on Wall Street with the
successful IPO. One area of concern for us centers on the heavy losses
TMCS posted for the nine months ending September 30, however, a $56.8
million loss.
And CitySearch plans on setting up its own local content productions
which we think may be a mistake due to the high cost of creating
deep-enough content for the cities it covers.
CitySearch produces 13 city guides and owns seven of them, with six
produced by media partners. CitySearch's revenue model relies on small
businesses paying for placement or ads in the guide. |
