The Friendfinder IPO, set to occur this Thursday, has been pushed back a week due to a volatile stock market. What are they waiting for, favorable astrological and wind conditions Frankly, I’m not sure how many times the worlds largest network of dating sites can afford to keep pushing back it’s IPO.
FriendFinder, on the other hand, was expected to flounder; analysts said there was minimal interest in the deal. The company is turning over all proceeds from its IPO to its creditors, which have waived loan-default terms. Its revenue for the first three quarters of 2009 was flat compared with the same period of 2008, and it has a history of net losses.
The financial markets are about to exert their influence on one of the most recognized brands the casual/adult dating market. Analysts have known from the start that this particular organization was a tough sell and the fact that the IPO has been delayed many times has not helped.
Back in 2007 Social Networking Watch publisher Mark Brooks said “I would not be surprised if a deal was on the table for FriendFinder. Will Dr Conru sell his baby? It’s got to be worth North of $1billion at this stage.” The selling price, to Penthouse, ended up being $500 million, but back then, even PlentyofFish’s price was speculated to be a similar valuation by some.
The day before the dating industries pilgrimage to Miami for the Internet Dating Conference last week, The New York Times asked, Is Racy FriendFinder I.P.O. Too Hot to Handle?
Analysts say the I.P.O. could serve as a litmus test for the emerging social networking sector, but aren’t sure how investors will receive its racy content and weak balance sheet.
I hope the first ridiculous statement was taken out of context. Facebook and other top social networks planning on eventual IPO’s are not not even close to an apples-to-apples comparison to FriendFinder. The second sentiment is right on. That’s the excitement of and IPO, the unknown (and the potential for incredible riches, although this does not seem to be the case in this particular circumstance.) Via the Wall Street Jornal.
Remember the 2004 PlanetOut IPO? Shares went from the $9 offering price to 38 cents. I’ve been involved in an IPO that was pulled the day prior to launch, and the emotional roller coaster is like nothing I’ve ever experienced.
In 2007, the NY Times wrote a story, A Thaw in Investment Prospects for Sex-Related Businesses? Maybe, which discussed the gradual acceptance of adult-themed investments in the VC community.
FriendFinder has worked incredibly hard to get to this point, focusing years of effort on a number of groundbreaking web properties, including sex, niche and international dating sites. Given what is publicly known about the internals of the company, the fact that many key leaders and soldiers left the company or were let go after the acquisition by Penthouse Media Group, and other key indicators, all we can do now is wish FriendFinder a healthy does of luck, and maybe pick up a few shares to show support for a company that has paved the way for many of today’s wealthy Internet-based entrepreneurs in the adult sector.
A client recently said to me that they wanted their affiliate network to be as large as Adult Friendfinder’s. I told them to be careful what they wished for. FriendFinder is an example of the risks and extraordinarily high costs associated with building a sustainable user base in the adult market. For all those years that Andrew Conru toiled to build an Internationally-recognized brand (one of many successful startups he built and sold), and they are still staggering under $500 million in debt.
I wonder what Fling, trailing slightly behind AdultFriendFinder in terms of traffic, has spent to get where it is today and what their debt load is. I would think that the company is much more efficient than FriendFinder was, given the years they have had to watch the market, ahem, mature.
Factoid: I even know people who met on AdultFriendFinder and got married.
Francis Gaskins of IPOdesktop.com sums things up, “I think this is a case of going public or going broke.” Here’s to hoping that FriendFinder finds some friends in the investment community next week.
