5. Audience
YTD Return: -44%
Date of IPO: 05/09/12
Founded in 2002, Audience (NASDAQ:ADNC) is a pioneer in voice technologies for mobile phones. Its services have required intensive R&D, delving into such areas as neuroscience, speech analysis, acoustics, spatial audio and CASA (a process that maps sound-separation functions in human hearing). Keep in mind that roughly two-thirds of Audience’s R&D team have advanced engineering degrees.
By the time of the IPO, Audience was a hyper-growth company. From 2009 to 2011, revenues surged from $5.7 million to $97.7 million. The company was even profitable for the past two years.
But according to the prospectus, about 80% of its revenues came from Apple (NASDAQ:AAPL). And when the company launched its iPhone 5, it nixed Audience as a supplier. On the news, the stock plunged 63%.
Back to the drawing board.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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