Jeff  Carter

Facebook($FB) reports and slumps after hours. Earlier this week, Zynga($ZNGA) got whacked. Groupon($GRPN) has been getting beat up since it went public. LinkedIn ($LNKD) is slightly above where it opened. Yelp ($YELP), lower.

All these are companies that were created post Sarbox and went public over the last year or so. Since March, they have gotten smacked and I don’t think Europe has that much to do with it.

YELP Chart

YELP data by YCharts

If these companies didn’t have the onerous Sarbox law staring them in the face, they would have come out much sooner than they did, and at much lower market caps.

Going public is a double edged sword. When you are a smaller public company, the expectations placed on your business are less than a company that has billions in market cap. The other problem all these companies have is that they are consumer products type companies where everyone on the street thinks they understand their business. Just because the target market is the same, every human being on the planet, doesn’t mean the business model or reason for existing is the same.

If these companies had gone public before they reached the billion dollar mark, how the public markets would have responded would have been much different. Instead, questions are being asked. Typical one, “How long before Zynga or Groupon trade on the pink sheets?”.

Going public is a painstaking process these days. The way the US regulates it hurts companies, and hurts our population.


Jeff Carter

Jeffrey Carter is an independent speculator. He has been trading since 1988. His blog site, Points and Figures was named by Minyanville as one of The 20 Most Influential Blogs in Financial Media.
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