Mobile advertising firm’s upside could rival Facebook, analyst says
SAN FRANCISCO (MarketWatch) — Millennial Media is set to unveil its much-anticipated initial public offering this week, with one analyst speculated that the mobile advertising firm’s IPO could potentially outshine the much-anticipated debut of Facebook.
Millennial Media, one of three expected tech debuts in a busy IPO week, has been a rising star in the mobile advertising market, where it’s battling it out with such bigger rivals as Google Inc. (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL)
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The Baltimore-based company, whose platform is geared to helping developers and advertisers come up with more effective advertising campaigns aimed at smartphones, tablets and other mobile devices, is offering a total of 10.2 million shares — though 1 million of those shares are being offered by selling stockholders.
The company is expected to price late Wednesday and begin trading Thursday on the New York Stock Exchange under the ticker “MM.”
The IPO has drawn so much attention that Millennial Media this week raised its projected price range to $11 to $13 a share, from its original range of $9 to $11 a share.
“We think this could be one of the hottest IPOs of 2012,” Morningstar IPO analyst James Krapfel said in an interview. “It’s the only pure play way to invest in mobile advertising.”
Krapfel added that Millennial Media will certainly not generate the press that Facebook has. But he said that in terms of “pricing upside” and post-IPO trading, the Millennial Media IPO “has arguably more upside,” especially given the high reported valuation for Facebook.
Scott Sweet of IPO Boutique offered a different view, noting that while he expects “a nice premium” on Millennial Media, he believes the Facebook launch will generate “pandemonium.”
In the mobile display ad arena, Millennial Media appears to be a David battling a couple of Goliaths. The company was No. 2 in terms of revenue in the $630 million market for mobile display advertising with 17% share, according to IDC. Millennial recently overtook Apple Inc. which was No. 3 with 15% of the market, while Google remained No. 1 with a 24% share, IDC said.
IDC analyst Karsten Weide said Millennial Media’s more open platform was one of the main reasons for its market-share gains.
“They have one upside versus Google, which is they’re not Google,” he said. In the mobile advertising world, he explained, “there are a lot of people who would like things to be more spread around,” noting the view of Google as being “too big and too powerful.”
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And Millennial Media could emerge as a stronger competitor by going public, he added.
“Millennial Media is a small company,” he said. “So the capital that they’re going to take in from this IPO is going to help them hire more engineers so they can improve their technology. They can hire more sales people.”
Sweet of IPO Boutique also noted that of the three tech IPOs scheduled for this week, Millennial Media is the “best.” IPO Boutique reported that the IPO is “oversubscribed to a strong retail and institution book.”
Also creating a buzz is the expected launch of CafePress. The San Mateo, Calif.-based e-commerce site is well-known for a service that allows customers design their own products. CafePress is offering 4.5 million shares at a price range of $16 to $18 a share.
It is expected to begin trading on Thursday on the Nasdaq Global Exchange under the ticker “CPRS.”
Another tech IPO features Vocera Communications, which develops mobile communications systems geared to hospitals.
The San Jose, Calif.-based company is offering 5.75 million shares at a price range of $12 to $14. The company is expected to price late Tuesday and begin trading Wednesday on the New York Stock Exchange under the ticker “VCRA.”
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