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RetailMeNot IPO a Hit, Raises $191M

But is it enough to get consumer Internet deals back on track?


Wall Street is celebrating the return of the online coupon IPO today.

RetailMeNot (SALE) was trading up about 30% as of midday Friday after pricing at the midpoint of its expected $20-to-$22 range, raising $191 million.

Lead underwriters included Morgan Stanley (MS), Goldman Sachs (GS) and Credit Suisse (CS).

It looks like the horrible Groupon (GRPN) IPO had little impact on the deal, and that investors saw the crucial differences between the two companies.

For example, RetailMeNot works directly with major retailers — including Home Depot (HD), Macy’s (M) and Kohl’s (KSS) — while Groupon focuses mostly on small, local merchants. Also, more than 90% of SALE’s traffic comes from unpaid sources — that is, from its own portfolio of websites. On a monthly basis, the company attracts more than 24 million visitors. Groupon, on the other hand, continues to spend substantial amounts on marketing to bring in users.

Another significant difference: RetailMeNot is highly profitable. From 2009 to 2012, the company increased net income from $2.2 million to $26 million, while revenues zoomed from $16.9 million to $144.7 million, proving the company’s ability to perform on both the top and bottom lines.

Mobile has been a big driver for SALE, and should continue to be going forward. According to IDC, the m-commerce market reached about $63.4 billion in 2012 and is expected to grow at a staggering 36% per year until 2017.

Given all this, it’s no wonder RetailMeNot pulled off such a successful IPO.

Still, don’t expect this to spur other consumer Internet companies to go public. While the SALE deal is encouraging, it still might be an outlier. Few consumer Internet firms are profitable — especially to RetailMeNot’s degree.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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