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MP3.com goes public: Public goes Crazy
mykey2k writes "Anyone remember this story back in March? Well, MP3.com went public Wednesday. There's a story here, which seems to have some details. "
It opened at $28, and went over $100 a share before leveling
out the in the $60s.
Rob, MPPP did _not_ open at $28. It IPO'd at $28. A few privileged folks (insiders, friends, bigwigs) could buy at that price. MPP opened at $92. That's the first price at which any normal person could buy. It closed at $61. If you thought you could "get rich quick" by buying at the open and selling at the close, you lost %30. Oops.
I intern at MP3.COM and I didn't get any options. I love the company, but maybe I should have asked instead of keeping my mouth shut...
Seriously though, the stock will settle down to the 30's I think and then pick up. Right now, their revenue is 85% advertising based, on just a few advertisers, so they really need to do some conventional advertising to pick up artists.
If MP3.COM would say, hand out cards and stickers at concerts, they would reach a crowd that:
a) obviously likes music, and
b) probably makes music.
For MP3.COM to really take off and make a profit, they will need to get some bands that get real airplay. They need to converge the digital medium with say radio. Get some stations to play MP3.COM bands for example. That would help bring awareness to the site and the artists.
Just my $.02,
# Hack the planet, it's important.
Well, they also sell what they call "DAM" CDs, which are CDs that have both the audio tracks (to play in a normal CD player) an the mp3s (so you can transfer to your computer without having to do the ripping/encoding yourself). They keep 50% of the profits from these sales, and give 50% to the artist.
However, they haven't made a profit yet.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
>They released about 12 million shares to the public..
Yes, but they don't sell the whole company -- just a fraction, actually. That's how Jeff Bezos of Amazon and the Yahoo boys became billionaires overnight; each of them owns a significant fraction of their company's stock. Microsoft stock is the vast majority of Bill Gates fortune. If they sold off all the shares in the IPO, they'd also lose control of the company.
Most stock sources will give you the market capitalization, which is the total number of shares times the current stock price. I think I got my numbers via excite.com.
It's a weird system. People generally buy stock not for the dividends (with a few exceptions, like utilities, that have pretty consistent earnings), but for the expectation that someone else will want to pay more for it later, and that later person is buying it for that same reason. Generally the only time stock valuation really has direct meaning is when one company buys another.
Ooh, a sarcasm detector. Oh, that's a real useful invention.
In case you're wondering, the only way you could have made money off of this is if you were one of the original IPO share purchasers, not buying the stock on the open market. (It does say they set aside shares for bands that have songs on their site.) The rest of us would have just lost money on it.
Sheesh, ~$4 billion market-cap for that company.
Ooh, a sarcasm detector. Oh, that's a real useful invention.
At one point MP3.com was worth 6.9 billion, larger than the 6.3 billion value of EMI. It is kind of ironic that they could become larger than one of the big five music companies. It definately makes me feel good to see people making a fortune on the internet. Maybe one day my little mp3 site http://www.astrojams.com will make me a few bucks but until then, I think I'll stick with my day job at Compaq.
Wired news had an interesting blurb on this, pointing out that 80+% of MP3.COM's revenues come from on-site advertising, and they lost a few mil last year, but due to the current MP3 hype, and the fact that apparently a lot of people think they own the MP3 technology (!) the company got bid up into the billions.
Greater fool theory, indeed!
I will probably catch some flames for this, but I'm not happy with the number of stock-related posts over the last few weeks. So-and-so is IPOing, so-and-so might be IPOing, so-and-so's shares went way up and levelled off, etc. As an anymous poster said earlier, this is getting to be "news for daytraders, stocks that matter."
I don't really care about any of this. I'm not so egotistical as to think that my opinions should change slashdot, but I would greatly appreciate it if a new "market" catagory could be created so I could have an easier time filtering this stuff out.
Thanks,
-OT
I really don't understand this. Why is MP3.com's stock selling so high? Don't get me wrong, I like MP3.com, very much. (Besides, they have Sister Machine Gun). But how are they going to make any money? Are ad revenues that good for them?
Pope Felix the Scurrilous.
Computer Geek by day, religious Icon by night.
As I see we're in the dawn of a crazy IPO-mania.
With all hype today about internet, people think they can make money of it easily.
(I will not be surprised if the same people are the people that answer "make $$$ quick" scams).
Some hype has gone over MP3, and *bang* MP3.com sales like hotcakes.
Linux hype? Slashdot is allover that redhat IPO, and soon Caldera and SuSE.
Anti-Microsoft? BeOS IPO sells!
Portals and "Web"? See how much Yahoo and amazon makes!
Basicly all of these (except for BeOS and Amazon) give away their products for nothing,
but "they will make tons of cash" since they are buzzword related.
At the end these companies will fall down like pyramid scams,
this can hurt economy quite much when it does.
(my bet would be this december, just before "Y2K" hype).
Investors today don't care about the product, but the name.
I recall story of a model-boat company changing their name to boat.com -
they trippled their value within a day before the investors knew they only sell models of boats.
And this company may have revenues much higher than mp3.com
(again, how will they make money?)
This is also the case for the cybersquatters thinking "suckmypole" will sell for $1000s,
and wondering why noone buys from them.
Except for mp3.com and cnet, I havn't seen a website that's most of it's value is it's domain(s).
---
The day Microsoft makes something that doesn't suck,
---
I'm going to live forever, or die in the attempt.
I believe Michael Robertson's holding of over a billion in stock makes him worth more than all senior executives of all music companies combined. Great! Someone who believes in freedom... with the resources to fight back. Let's hope it doesn't corrupt him too soon.
A note for anyone valuing this company (or any other Net stock) by obsolete metrics like revenues: those billions are built on the concept, not the company. Concepts in the end are more powerful than earnings. After all, a little concept called "money" was powerful enough to survive losing the only thing that gave it value - being backed by gold.
I'd bet people were saying the same thing about paper money then as they say about Net stocks now.
- Read fiction at www.espressostories.com
Does MP3.com have a reasonable buisness plan? How do they plan on making money? It seems like a very good site, but I do not believe that selling ad space alone justifies the market's response to their IPO. I may be missing something, but this seems to be a case of people jumping blindly at a .com stock.
MP3.com's stock is so high because people are
buying into the idea of MP3s with
MP3.com, not any profitability, etc.
You make a bet with MP3.com that it will become
the dissemination spot for MP3s in the
next few years, and that owning the online
MP3 market is worth something.
That's the reason it's bid into the billions;
people are buying a chance at ownership of
all online MP3 distribution.
If this doesn't make sense to you, then amazon.com
stock prices probably don't either, for the
same reason -- people are buying the risky
chance that amazon.com will become the online
clearing house for many goods.
Note that amazon.com is down today on their
earnings reports, which are not substantially
lower than analysts expected. What's lower
is the volume growth in revenue -- the market
is upset that amazon is not growing quickly.
They're perfectly happy to fund a cash-loss
business scheme at this point, as evidenced
by amazon.com's market-cap. They're not pleased
that amazon.com's growth is slowing.
It will be the same story with RedHat --
the market will be buying "Linux" by buying
redhat. Expect it to be huge.
Incidentally, I did get in on the MP3 IPO.
Tripled my money in 2 hours. I will do the
same for RedHat if I can get any shares.
I am sure that the owners of these companies are ecstatic but this company and their ilk - amazon, barnes&noble online, ebay ,etcetera, etcetera - just don't make any money. Yes they do have "exposure" but I cannot see them ever actually making money. If you are a serious longterm investor I would be "very careful" about where I put my money.
Great for a short-term flutter but the bubble WILL burst.