The IPO was priced at $12, which was the low on its $12 to $14 price range. On its first day of trading, the stock ended at $12. As of yesterday, the stock was trading below its offering price at $11.50 -- that is, Fastclick is officially a "broken IPO."
Traditionally, this is a big negative. A broken IPO tends to tread water as investors look for the next deal. After all, IPO investors are looking for a quick buck.
But if an investor is looking for the long term, then sometimes a broken IPO can be an opportunity. The IPO might've been priced fairly given underlying fundamentals, the result being its price stability. Before jumping into Fastclick, you need to look at the fundamentals in order to discern whether an opportunity does indeed exist.
Fastclick develops technologies that help companies advertise more effectively on the Web. Its key technology is the Optimization Engine, which analyzes Internet users' responses to the ads they serve and refines the advertisers' campaign to be the most effective, a venue that has become increasingly relevant given Google
Fastclick has a network of more than 8,000 highly trafficked websites to serve its ads. As of December, there were 114 million unique users and the placement of 6.5 billion ads. Since inception, Fastclick has been a profitable company. Last year, revenues surged from $28.7 million to $58 million. Profits were $5.1 million in 2004.
Also worthy of consideration, several well-heeled competitors already exist, such as ValueClick
The search space appears to be in the midst of massive consolidation -- recall InterActive's
Fool contributor Tom Taulli does not own shares mentioned in this article.