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5 Online IPOs I Want by Summer

By Tyler Lacoma - Feb 22, 2014 at 10:02AM

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Online companies are ready to sizzle again: These public offerings may be only months away.

Ready for a few sexy new IPOs by your favorite online companies? These businesses certainly are, and if we're lucky the next few months will see announcements by some or all of them. So buckle down and take a look, because 2014 is shaping up to be a big year for online services just like these.

Keep in mind that IPOs are typically tackled by large investment groups within the first couple days, which can rapidly inflate value. It is better to outwait this initial flare in value and buy during the more stable interval afterward. When marking IPOs on your calendar, remember that a little patience is advised.

Airbnb is huge for a young, private company. Valued at $2.5 billion in 2013 and expected to keep growing, this travel/rental/service-sharer has a strong global presence (186 countries!) and has started acquiring lesser businesses like Localmind to boost its competitive app features. Venture funding has given Airbnb $120 million so far, and the company seems perfectly positioned for a successful IPO. If companies like competitor HomeAway(AWAY.DL), whose stock has risen from around $30 to over $40 in the past few months , can succeed in this market, then the youth-friendly Airbnb certainly can.

HomeAway's more traditional vacation rentals appeal to older travelers and families, but even in this more staid market revenues are notably up, with HomeAway sales rising 26% between year over year. Firms like Barclays, UBS AG, and Canaccord Genuity have all recently upgraded HomeAway share ratings, indicating positive forecasts for this market. But while HomeAway is a mainstream company, Airbnb has the capability to break into the market. One of the few dark spots in Airbnb's sunny sky is regulatory measures: Nervous cities may require more licensing for private room rentals in efforts to protect the old-fashioned hotel businesses.

Delivery Agent
Delivery Agent is either profiting from a dying industry or starting a new tech trend. The company works with TV providers and sports teams to help sell on-screen products in real time, using mobile apps and similar software. This odd corner of the advertising market has won investments from Samsung and Intel , among others, and the company has already announced its plans for a 2014 IPO. Who else will benefit from the offering? Try eBay's PayPal, which hooked up with DA last year to facilitate payments and could add a whole new market segment of TV watchers to its fold if DA continues to grow.

Riding the cloud computing wave has been a bumpy ride for Dropbox, but despite its recent issues with hacking allegations (it wasn't hacked) and service outages, the company is still estimated to be worth around $10 billion. Rumors say that its latest round of funding pulled in an impressive $250 million . No official IPO plans have been made yet, but the company is pushing hard into the commercial market and is working on profitability: It's only a matter of time, especially in tech-friendly 2014.

Etsy is an odd duck. The handcraft-based online marketplace enjoys the innocuous middle ground it currently occupies, but still seeks funding rounds. The latest, in 2012, won it $40 million from investors who wanted to see the company rise from a flower child into a corporate darling. Will we see a 2014 IPO? On the con side, competitors like eBay and Amazon could make future growth tricky for Etsy. On the plus side, similar companies like Zulily (NASDAQ: ZU) have shown that smaller marketplaces can still have successful IPOs. Zulily, which offers merchandise focused on mothers and their children, held a successful IPO in November, with stock rising 77 percent to $37.70 during its first trading day and now sitting comfortably at around $42. Zulily's concentration on a very particular market segment is reminiscent of Etsy's loyalty to the craft demographic, and similar success could be in store.

Finally, in recent months Etsy made changes to encourage larger vendors  to sell more popular crafted items on its site, which indicates intention for future expansion and maybe a public offering in the (near?) future.

Dating-company Zoosk has already raised more than $60 million since its 2007 founding, and the popularity of online dating sites has come a long way since then. Zoosk, with its free sign-ups and tiered services, has one of the most flexible models in the business and reported that memberships doubled in 2012. No word yet on 2013 numbers, but if the company has improved its profit margins (which were thought to be slim-to-none ) it may be ready for the expected IPO at last. A side note: Zoosk won a lot of membership through its connection with Facebook(META -2.57%), whose own IPO has finally settled down into steady growth, hitting all-time highs in recent days. The current Facebook success might encourage Zoosk to go public as well. Founder Mark Zuckerberg appears to be on a quest to form new synergies with related services, from Instagram to WhatsApp. In Zoosk's case, perhaps a long-term partnership would work better than an outright acquisition, and give the dating service a connection to a well-known brand and growing stock. After the pricey $19 billion dump on WhatsApp, Facebook may also be looking for a less expensive way to integrate new features into its mix, particularly with a long-term partner.

Make no mistake, 2014 is a busy year, and these are just several of the most interesting options. If you thrive on IPOs, make sure to keep track of Alibaba, Square, Go Daddy, and just so many more.


Tyler Lacoma has no position in any stocks mentioned. The Motley Fool recommends Facebook and HomeAway. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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