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:
theglobe.com | proposed |
pro forma IPO estimates | ticker |
Proposed ticker | TGLO |
Does what? | Websteader |
Shares offered | 3.10 |
Greenshoe | 0.40 |
Target share price | $ 12.00 |
Gross proceeds | $ 38.45 |
Shares outstanding | 9.79 |
IPO market cap | $ 117.50 |
Options/warrants | 3.92 |
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 |
FDS enterprise/CY1998 | 36.44 |
FDS enterprise/CY1999 | 15.62 |
Employees (full-time) | 93 |
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.
For comparison, Websteader and direct marketer XOOM, (pending IPO
also) generated $2.6 million the first six-months of 1998 (with 39
full-time employees).
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?
