3 tech offerings that defied the shorts

All of these IPOs have continued to triumph despite numerous short calls.

By Jim Cramer Sep 4, 2013 10:33AM

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Traffic arrow on green pavement. © Pete Starman, PhotographerWhen we look back at the evolution of the social-, mobile- and cloud-technology offerings of the last year, we should smile about the trajectory of many of the companies that have launched in that time. That's because these stocks have been incredible performers: LinkedIn (LNKD), which announced a huge secondary offering Tuesday night; Zillow (Z), which just got a gigantic new shareholder; and Yelp (YELP).

 

First consider LinkedIn. Here's a company that came public in May of 2011 at $45 and immediately went to $94, as the social-networking site had a ton of buzz about it. At the time, the opening was widely criticized as a throwback to the dot-bomb days, when people lost fortunes chasing dubious Internet companies without track records or even opportunities for profitability -- or, in some cases, even sales. Sure enough, the stock dropped to $60 six months later, and the chatter was that the site was just a fad -- and that there really wasn't any hope for long-term growth.

 

Two years later and you have had a four-fold increase in earnings -- not revenue, but earnings -- and the stock isn't done yet. In fact, I bet its $1 billion offering will be snapped up without any problem, and that it will be put away by growth-seeking money managers who recognize that earnings could conceivably double again next year.

 

Then there's Zillow, the real-estate-listing company. Here's one that is absolutely despised by many short sellers, and there's high-quality research out there that's been saying it is very overpriced. But was it? The stock had its initial public offering at $20 on July 20, 2011, and immediately opened at $35.77 amid calls of Internet over-exuberance. After all, wasn't this just a company that helped you find the price of your house? Sure enough, it came to earth fast, or at least almost back to its IPO price, trading to $22 six months later amid suggestions that the competition had gotten too great.

 

When I mentioned this stock positively just a week ago, I was bombarded by people who thought it was overvalued. Among them was a fellow who was all over me with top-notch research about what a joke Zillow was, including this gem: "It doesn't even own its own content!" Maybe someone should tell that to Australian billionaire James Packer. We learned last night that he bought 9.4% of the company. No wonder its secondary offering -- 5 million shares price at $82, a 3% discount to the last sale -- worked so well.

Finally, there's Yelp, the Internet-listings company with a great deal of mobile momentum. Here's one that came public at $15 in March of 2012 and flew up to $24 on opening day. A few months later, as part of a broader June swoon, it traded below the offering price, sinking to $14. But a series of spectacular revenue-growth quarters have now powered the stock up to $52, as it is clear the company can go profitable any time it wants. The international rollout, though, is so strong that every penny should go to it. Smart, smart company.

 

All three of these stocks have been gigantic winners, and I think they'll continue to be so, given how well they dovetail into the trinity of social, mobile and cloud. I have to believe that LinkedIn, even as it has more than doubled this year, will be able to find buyers right at these levels for the billion offering. That's how starved managers are for the shares of fast-growing companies. The darned thing's worth $27 billion already.

 

I know it's chic to be jaundiced and jaded. But these three stocks have defied numerous short calls and have continued to triumph. Those who felt burned during the last Internet go-around, and even felt vindicate on the blow-ups of Groupon (GRPN) and Zynga (ZNGA) -- or the Facebook (FB) IPO and its aftermath, for that matter -- have to be smarting this time around. Because this time around, for the most part, they worked. They seem to continue working, too, even at these admittedly exalted levels.

cramer


 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust  and is long FB.

 


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43Comments
Sep 4, 2013 11:51AM
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My answer to the Syrian dilemma. The first 4 cruise missiles will have four figures strapped to the them.  Pelosi, Reid, Graham, and Boinker.  This my friends will answer the issue.  Let these arrogant self serving creeps go fight their own false war.  NO MORE STUPID POLITICAL WARRING!
Sep 4, 2013 12:47PM
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Another glitch on the Nasdaq, hey here's an idea, get your sh@tt together Nasdaq.  People lose money because of these glitches and they are inexcusable.
In other news Syria is still a tiny speck of an economy with no oil........
One conspiracy theory is that the Sunni states want to get control of Syria so they can run a pipeline from Saudi Arabia to Europe, while the Shia want to build one from Iran.  I guess we'll find out if this is total BS or not in a few years.  Either way, El-qada and Hezbola can continue to attack each other and bleed each other dry.  The USA/west should really just help with all the civilians that have fled the violence into the neighboring countries. 
Sep 4, 2013 12:35PM
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When bad  stuff happens around the world .., what does America do?  It goes to war. WHY?
Sep 4, 2013 11:51AM
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That quirky dumb reality nobody is catching... $7.7 BILLION pulled from PIMCO bonds, the Trade Gap is widening... TIPS are LOSING money but all of our groceries are increasing in price or decreasing in package size or quantity... we're gonna blow somebody up whether says so or not... AND... there isn't even any part time job creation any longer... we are LOSING more jobs while stupid scared sheep are agreeing to work longer hours. Add it up and it doesn't equal-- RECOVERY. But hey... there's always that 5-year investment plan from the nearly 90 year old Buffett...
Sep 4, 2013 12:27PM
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Fortunately an investments intrinsic fundamentals eventually determine it's value but unfortunately for many the perception of an investments value are more likely to establish it immediate value. Remember, it's buy low and sell higher regardless of your timeframe..
Sep 4, 2013 11:44AM
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"More to Come"  We have done this for three straight days!! Still not going to make a big move.  Congress or someone will remind these traders that an attack is on the way.  Refugees will need our assistance as always and we will respond when our main objective is taking out the arsenal of the Syrian goverment.  Not that hard to understand right!  Refugee assistance 200 million.  Each missle 75 million.  Rebuilding afterwards because it is expected of us after 100 targets are hit 600 million.  that leads us too what about 100,000 troops on the ground.  Destroyers circling, another 200 million above what is allocated already.  12 billion in not entering into a conflict, priceless. 

 

Trade deficit used to be enough news to drop 50 points but instead we are up!  Ceiling will fall, so go buy facebook and let it ride.  Jim last night said raise money, that means buy FB.  I am going with the raise money bit.

 

Housing on the rise, how long can that sustain its growth.  Short the market slump of September and play the long side afterwards. Wait until the taper then hop back on the train(wreck) ride for 8% then run till January.      

Sep 4, 2013 1:39PM
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Thought this upside would have happened yesterday, after Foreign Indices going up nicely for a couple of days...Then all we did was rout the Markets last night.

 

This Syria thing must be effecting Russia's pocket book also, otherwise don't believe they would be buying into anything U.S. has to say...

It would be interesting to be a "fly on the wall" at the G-20 Summit...Maybe others are applying pressure there too.

 

As far as support to the "refugees" leaving Syria, yeah I think we are doing more then our "fair share" as usual, but many there seem to want us to bomb the hell out of Asaad..

But I'm not really sure that we (US), have figured out who all the enemies are there yet...?

And could we end up helping the wrong sides....Without more Intel.??

Sep 4, 2013 11:50AM
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Traders do read this site .. we are fortunate to have this medium for constructive comment,  It is good to see that traders todazy are focused on proven facts
Sep 4, 2013 10:55AM
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Lets stay in focus.  The FED is gaming the average investor into believing these market values reflect reality.  And for some this is just fine.  Take away the two trillion extra in debting per year and then prove their worth.  Consumers in my opinion will soon tire of the massive onslaught of online advertizing.   Becoming complacent and believing everthing you hear and read can be very expensive. Just look at the trouble it took to post here today.  Organized assaults and chaos seem to be the new norm on these internet sites.  Will it come down to each of these sites paying to destroy the other or paying for protection to even exist?  I see a caveat to the existence of these models on the horizon.
Sep 4, 2013 2:22PM
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Its about 1415 hrs and we are hanging in there despite the good old Nasdaq that is at it again....Do not take anything for granted though, we still have plenty of crooks hanging around and still almost 2 ours left...Never take these scumbags for granted.....More after the close.
Sep 4, 2013 1:47PM
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Looks like MSN is shutting me down again...... It is so funny all of a sudden they want a code to confirm I'm me. First time I asked for the code it never showed up. The next time I got a code and it wouldn't work. What a joke.
Sep 4, 2013 3:38PM
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Markets are doing fine as expected...

 

But tired of running over "molehills" 2-3 times a week...

That's not investing...It's frequent trading by the big guys.

Gotta make their numbers and 2% seems to be the ticket.?

Sep 4, 2013 2:13PM
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It's that "drunken Pumpkin"....It's all about the Pumpkin.
Sep 4, 2013 11:35AM
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Absolutely... let's stay in focus. The markets have no ability to sustain business platforms who don't have a clue how to be enterprises. The end is near; the beginning of forced reality is bearing down on us like a freight train.
Sep 4, 2013 1:10PM
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Not really a conspiracy theory - fact is July 2013 there was an agreement signed by Iran/Iraq/Syria to build the pipeline ......the Emirates. Saudis, Israelis and the West DO NOT want this to happen for various different reasons.  Prince Bandar - head of saudi intelligence offered russia a 15 billion dollar arms contract if they backed off supporting al assad ....so far they have said no but there is also a stick to go with the carrot .....

The west and the rest are determined al assad should go - and as the "rebels" were starting to lose ground they need a little help .... President O. received his orders and sadly is not allowed to say no - the best he could do is share the bowl of sh*t that was delivered to him with congress and the repubs. The missile strikes are aimed at pushing the balance of power back to the rebels so BAA is f*cked ...he just does not know it yet ...... the sad thing is we are now fighting on the side of al queda and a collection of murderous scum ...(as are baa's side as well) .....

Big money wins all the time .......read some of Robert Fisks article from the Independent UK to understand what is going on .....
Sep 4, 2013 5:29PM
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Not triple digits but we'll take it any day of the week...Not a bad day at all but remember, tomorrow will be completely different...The cry babies will try to do their thing early and of course blame it on Syria, a country with a big and powerful stock market...Yeah right.....Oh well, we will deal with it tomorrow.
Sep 4, 2013 10:58AM
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We started the day in a positive note, volume not as high as yesterday but better than the last few weeks....Very early though and scumbags have not left us...Wishful thinking.....Oh well, lets see if we can keep this up....Maybe its because the community organizer is far far away...Who knows....More later.
Sep 4, 2013 1:16PM
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Seems to me MSN....Had their share of "glitches" this morning spent most my time on yahoo and kitco getting the straight skinny, market reports and other well written articles...

 

Where is Fatazz, I want to whip him like the red-headed, unwanted, stepchild that he is...

Miss Lilly can take care of his box-cleaner Mr. Brucey. with one quick broom handle.

I figure him and CGT share space under the same bridge out near the 101...

And Ms. Bambi (the cat lady) is across the way in a different crate or box, hers is bigger.

Sep 4, 2013 1:22PM
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"Another glitch on the Nasdaq, hey here's an idea, get your sh@tt together Nasdaq.  People lose money because of these glitches and they are inexcusable."

"Mark Cuban, the billionaire owner of the Dallas Mavs, says he is 100% positive this was no glitch but a planned attack."

 

Come to realize the vulnerability of our Modern Day. Major universities report MILLIONS of attacks on such a regular basis that they are dedicating more and more resources to the Tech Train Wreck and less toward actual education. The part that should sober you quickly from your Kool Aid stupor is- that you sign a new Disclaimer every quarter about the integrity of your online accounts. They specifically defer responsibility BACK TO YOU. If your account is cross-tethered to your other accounts, hackers are fully capable of taking you completely down to zero without you having ANY form of protection or recourse. Wake up- idiots. If my generation was the last to actually do things with paper trails and records, then Gen X & Y are fully incapable of it. So... who's employed and who is-- clueless? Disagree? Look up- fractional education and see how much of any full process you actually know.  

Sep 4, 2013 11:41AM
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Linked-in... Jim supports a criminal-level exclusion-clique machine that deems competence by where and how much you spent on your college degrees and absolutely nothing on your experience. Better we dump this prejudice machine and put the onus on management to be management and rate them again on recruiting selecting hiring training and supervising... that should clear 99% of existing losers out of those roles and free them up for competence.

 

Zillow-- the wanna-be replacement for the multi-list. We don't need it.

 

Yelp-- another clueless site to fill with banner ads.

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