Vringo Adjusts Target Down, Aims To Raise $11 Million In IPO
UPDATE (6/23): The funding target was $12 million with the potential to reach $13.8 million if an over-allotment of shares was exercised, not $64.3 million as we previously stated. Vringo shares began trading on Tuesday, June 22.
Investors are showing only tepid interest in mobile startups going public. Vringo, a company specializing in selling video ringtones, priced its initial public offering Tuesday at $4.60 per share, aiming to raise $11 million. That amount is well below the $64.3 million originally hoped to bring in when it filed for an IPO back in January. [Please see correction above]
Similarly, mobile data services company Motricity last week completed a $60 million IPO after initially filing to raise $250 million. The 6 million share sold at $10 each was also recently scaled back from offering of 6.75 million shares valued at $14 to $16 apiece. The company's share closed Tuesday below its offering price at $9.25.
Motricity has touted that well-known billionaire investor Carl Icahn owned an 18% stake in the company prior to the IPO, and had purchased a million shares through the offering. But that didn't seem to impress investors much as the price fell 7.4% on the first day of trading. Vringo, which plans to start trading June 25, is likely to get a less than enthusiastic reception from investors as well.
One has to question why New York-based Vringo is trying to go public without first establishing a successful business. In its most recent amended registration statement filed with the SEC, the company acknowledged having generated no significant revenue since its founding in 2006 and through the first quarter of 2010 had posted a loss of $22.1 million and a net cash outflow from operations of $19.3 million. Vringo hasn't shown that it can generate revenue, let alone a profit.
The IPO market this year has been difficult for companies generally lately, with many deals pricing below their expected range or trading weakly. VoIP services-provider BroadSoft, for instance, closed at $8.30 a share -- down 7.8% from its IPO price of $9 on the first day of trading last Wednesday. The choppy IPO market combined with Vringo's lack of strong fundamentals could lead to a rough debut for the company.