The Critical 'I'

Read. React. Repeat.

Wednesday, August 18, 2004

REVENGE OF THE DOT-COM IPO
No profits in sight. Wispy business models. Hyper-marketing and brand promotion. VCs and underwriters lining up.

Yup, the dot-com era is back again, with Google's IPO inspiring ticker-symbol dreams for bunches of online fly-by-nights.

And just in case you forgot what it was like before the late-'90s bubble burst:
Peter S. Fader, a professor at the Wharton School of the University of Pennsylvania, said some companies treat their IPOs more like a marketing opportunity than a capital-raising exercise. Buying these stocks "is no different than betting on what the temperature is going to be in Tuscaloosa tomorrow," he said.
That says it all. Buying shares in these instances is more akin to funding an ad campaign than acquiring equity in an actual company. Invest wisely!