Third Rock From The Sum: theglobe.com's IPO May Go This Week
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Unlike planet Earth, which is primarily covered with water, theglobe.com looks parched for revenue so far, in its path to liquidity via IPO. First six months generated just $1.1 million (with 93 full-time employees) with a loss of $5.8 million. We target its public debut, which may go this week, at 56x estimated revenues. Let's take a spin of theglobe inside the numbers:
|pro forma IPO estimates||ticker|
|Target share price||$ 12.00|
|Gross proceeds||$ 38.45|
|IPO market cap||$ 117.50|
|Fully-diluted shares (FDS)||14.12|
|FDS market cap||$ 169.38|
|Working capital||$ 43.95|
|Long-term debt||$ -|
|Warrant inflow||$ 16.10|
|FDS enterprise value||$ 109.33|
|Latest full-year revenue||$ 0.77|
|Six mos. revenue to 6/98||$ 1.17|
|Est. calendar (CY) 1998 revenue||$ 3.00|
|Six mos.loss to 6/98||($5.82)|
|Est. CY99 revenue||$ 7.00|
|FDS enterprise/latest year rev.||141.99|
|FDS market cap/est. CY98 revenue||56.46|
|FDS market cap/est. CY99 revenue||24.20|
|Enterprise value/employee||$ 1.18|
|Latest six mos. revenue/employee||$ 0.01|
|Lead underwriter||Bear Sterns|
|© 1998 Mecklermedia|
|all figures in millions, except share price, multiples|
The well-designed site, one of the more attractive Webstead sites on the Internet, offers users the chance to build Web pages, chat, e-mail and rudimentary shopping services. Areas divide by topic and interest, similar to GeoCities, XOOM or TalkCity. Let's look closer at theglobe's valuation.
Fully-diluted market cap reaches about $170 million. With working capital and warrant inflow, the enterprise value comes down to a more gravity-like 16x next year's revenues, which we think is a more appropriate valuation for a firm in its first iteration of really generating any revenue at all.
XOOM direct sells to anyone who signs up with its service as part of the bargain of having a free Web site allocation. theglobe.com, like others in the community space, relies more on ads than selling direct. Both sites show strong growth this year, XOOM being the second-fastest growing site and theglobe.com the sixth-fastest, according to Media Metrix.
theglobe.com began in May 1995, and now boasts more than 1.9 million members and 6.5 million unique visitors to the site. Besides Webstead space, chat and e-mail, it offers users news, weather, movie and music reviews, multi-player gaming, horoscopes and personals.
About 100,000 new members have joined theglobe.com each month since October 1997 with about one-third of visitors coming from outside the U.S. Chairman Michael Egan came on board in August 1997, through his Dancing Bear Investments, the primary shareholder in theglobe.com. >From 1986 to 1996, Egan was the majority owner and Chairman of Alamo Rent-A-Car.
Fellow board member Wayne Huizenga ran Blockbuster from April 1987 through September 1994. The two co-founders, each in their mid-20s, act as co-CEOs. Bear, Stearns & Co. Inc. and Volpe Brown Whelan & Company are the underwriters.
Overall, we could see how theglobe.com could fit with something like Snap!, the NBC-CNET portal wannabe, or perhaps a media firm like MTV, who may want to wrap some users around its offerings.
Wall Street may show some interest if GeoCities is any indication. GCTY trades about 39% of its high, however. Is the world as round as theglobe would like it to be?