Vonage Debut Turns Ugly – Currently Down 14 Percent
The Vonage IPO got off to a rocky start today, with shares falling 14% in furious trading. The Holmdel, N.J., Net calling shop priced its initial public offering late Tuesday at $17 a share, raising some $531 million. But Vonage tanked soon after Wednesday morning’s opening, hitting $14.50 on the New York Stock Exchange with 21 million shares changing hands.
Vonage managed to accumulate 1.6 million users and booked $119 million in revenue in the first quarter ended in March. But to keep the top line growing, Vonage needs to spend a lot more money, which is among the reason it turned to the public market for financing. As one of the nation’s biggest advertisers, Vonage has racked up massive marketing expenses. In the first quarter Vonage spent $88.3 million on marketing, up 59% from a year earlier. As of March 31, Vonage had an accumulated deficit of $467.4 million.
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