Based upon ValuEngine models and my proprietary analytics, it takes a certain period of time to provide enough data to give accurate analysis and profiles. In my judgment, it takes nine years of data to assume that all possible bullish or bearish events have been factored into the price movement of a stock. Obviously that is not possible in the IPO market since May 2009.
The nine Internet IPOs I am evaluating today have enough price and earnings history to at least make a prudent evaluation and prepare an IPO report card.
Let's start with the macro and then drill down to the micro:
The computer and technology sector is 20.8% overvalued with the Internet software industry 3.1% overvalued, the Internet content industry 20.9% overvalued, and the Internet services industry 21.6%. Stocks remain under a ValuEngine valuation warning with 69.2% of all stocks overvalued.
Reading the Table
OV / UN Valued - The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating - A "1-Engine" rating is a Strong Sell, a "2-Engine" rating is a Sell, a "3-Engine" rating is a Hold, a "4-Engine" rating is a Buy and a "5-Engine" rating is a Strong Buy.
Last 12-Month Return (%) - Stocks with a Red number declined by that percentage over the last twelve months. Stocks with a Black number increased by that percentage.
Forecast 1-Year Return - Stocks with a Red number are projected to decline by that percentage over the next twelve months. Stocks with a Black number in the Table are projected to move higher by that percentage over the next twelve months.
Value Level: is the price at which to enter a GTC Limit Order to buy on weakness. The letters mean; W-Weekly, M-Monthly, Q-Quarterly, S-Semiannual and A- Annual. Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: is the price at which to enter a GTC Limit Order to sell on strength.
The IPO for OpenTable ($64.44) was in May 2009. The company provides Web site software for making restaurant reservations online. OpenTable moved sideways around $25 until February 2010 when the stock began a parabolic move to an all-time high of $118.66 in April 2011. The stock stumbled to $31.54 in November 2011 and has since traded higher to a 2013 high at $72.18 on May 21. Today the upside over the next 12 months appears to be limited. My weekly value level is $61.52 with a monthly risky level at $69.67.
The IPO for Shanda Game ($3.89) was in September 2009. The company offers Internet games including role-playing offerings. Shanda is considered a failed IPO as the stock traded down from its debut price of $12.50 to $2.68 on April 22, 2013, and has rebounded since then. Investors buying a stock below $3 a share should consider this type of investment as buying an option on survival. My monthly value level is $2.86 with a weekly pivot at $3.56.
The IPO for Renren ($3.17) was in May 2011. The company operates a social-networking Internet platform in China concentrating on content sharing, music, games and shopping. Renren is considered another failed IPO, making its debut at $19.50 and never coming close to that price again. The stock was below $3 in April 2013. An investment in Renren should thus be considered as an option on survival. My monthly value level is $2.30 with a weekly pivot at $3.56.
The IPO for LinkedIn ($162.46) was in May 2011. The company provides an online network for professionals to share knowledge and potential business opportunities. LinkedIn opened at $83 as an IPO, but by June 20, 2011, could be bought in the low $60s. That was a buying opportunity to $115 by the end of July. The all-time low was $55.98 in November 2011. Since then, LinkedIn has been on a roll to a high of $202.91 on May 2. It seems like the bias today is additional downside with my monthly risky level at $174.06.
The IPO for Pandora Media ($14.39) was in June 2011. The company provides customized Internet radio services, but online music services have become quite competitive. Pandora can be considered another failed IPO, having a rough opening day as an IPO, trading down from an open of $20. Since then, the stock has had its ups and downs until bottoming at $7.08 in November 2012. The upside into 2013 reached $19.37 on May 24, but has tumbled 25% since then. My monthly value level is $13.98 with a weekly risky level at $17.73.
The IPO for Bankrate ($23.80) was in June 2011. The company provides online information on almost all kinds of interest rates including mortgages. Bankrate was a successful IPO, trading up from a debut price of $14 to a high of $25.95 in February 2012 after a dip to $13.38 on August 22, 2011. Bankrate has had a difficult ride since February 2012 and then traded down to just under $10 on Feb. 13, 2013. The stock followed the housing recovery with a 2013 high of $16.15 on May 1. My monthly value level is $9.50 with a weekly risky level at $16.71.
The IPO for Zillow ($52) was in July 2011. The company provides real estate information for all who participate in the housing market including buyers and sellers. Zillow was a failed IPO as shares plunged from an IPO open at $57 to $21.23 into December 2011. Since then, the stock performance has improved. The roller-coaster ride in 2012 was to a high at $46.86 in September, and then to a low of $23 in November 2012. The performance in 2013 tracked the home builders higher to an all-time high at $63.76 on May 7, and the stock is down 18% since then. My monthly value level is $46.53 with a weekly risky level at $60.31.
The IPO for Yelp ($27.46) was in March 2012. The company provides an online community covering restaurants, shopping, nightlife, financial services and health care. Yelp opened at $22.01 as an IPO then had its ups and downs, up to $31.96 on March 28, 2012, and then down to $14.10 on June 4, 2012. The stock had a strong run in 2013, setting an all-time high at $32.88 on May 20, and is down 16% since then. My monthly value level is $20.65 with a weekly risky level at $32.01.
The controversial IPO for Facebook ($23.52) was on May 18, 2012. The company is arguably the poster child for what a social-networking company should be. Facebook traded as high as $45 on its IPO debut and quickly tumbled from there. The low was $17.55 on Sept. 4, 2012. The 2013 high was $32.50 on Jan. 28 and has moved sideways to down since then. From the 2013 high, the stock is down 27%. My weekly pivot is $24.66 with a monthly risky level at $30.79.
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.