For those keeping track, a new benchmark has just been set: MetroPCS
The smashing debut shows that investors still have an appetite for wireless-services providers -- at least the ones turning out high growth and income. In fact, investors seem to be tripping over themselves to get shares of this company. The stock opened at $25.10, traded higher on very high volume, and finished its day at $27.40, 19.1% above the offering price of $23.
I talked a few weeks ago about why MetroPCS would enjoy a lot of investor interest. The company's wireless-service plans differ from those of most competitors by offering unlimited services for flat monthly fees without a contract. Consumers appear to like the difference; MetroPCS and similar competitor Leap Wireless are showing impressive subscriber growth. For instance, MetroPCS and Leap grew their subscriber bases by 52.8% and 33.7%, respectively, in 2006. In comparison, the largest U.S. wireless provider, AT&T
The success of this IPO stands in stark contrast to recent IPOs of other telecoms, such as Clearwire, down 28% from its debut last month, and Vonage
The main threat facing MetroPCS going forward is the possibility that larger carriers -- AT&T, Verizon Wireless (a joint venture of Verizon Communications
With MetroPCS' market capitalization now standing north of $9 billion, investors are expecting few mistakes from the company going forward. For MetroPCS to become cash flow positive, it will have to stay ahead of the competitors and continue to offer more value-added, differentiated services.
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Fool contributor Dave Mock sees no evidence that he's made of slugs, snails, or puppy dogs' tails. He owns no shares of companies mentioned here. Vodafone is a Motley Fool Inside Value recommendation. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy is made of sugar and spice and everything nice.
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