OpenTable’s debut was always going to be the real test of Wall Street’s reawakening interest in tech IPOs. In the event, it’s gone off like a rocket.
Other newcomers – like SolarWinds yesterday – were looking to raise much larger amounts and had stronger track records. Would Wall Street really be interested in a $40m deal from an internet company with only $56m in revenues last year and no profits?
The answer is a resounding “yes”. The shares were priced at $20, compared to an indicated price range last week of $12-14 , and are trading above $27 on their first day today. (Update: by the end of Thursday the shares had soared to $33.55, a first-day pop of more than 70 per cent. That really is reminiscent of the Dotcom years.)
As we pointed out a couple of weeks ago, OpenTable may be a consumer internet service, but at least it seems to have a more robust business model than the first generation of Dotcoms. Restaurants pay for its software and a fee for every diner that uses the service to make a reservation.
A deal like this is sure to have grabbed the attention of every venture capitalist in Silicon Valley and on Route 128. As we reported today, the return of an active IPO market still looks some way off, but a deal like OpenTable will certainly help.
