Kayak Is Just the First Victim of Facebook's Selfish IPO

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One of the many groups that will lose out after Facebook's selfish (and somewhat failing) IPO are all the other tech companies that hoped to ride out the bubble Facebook was supposed to create. And, Kayak is Facebook's first victim. The online travel site has postponed its IPO song and dance, which was supposed to begin around Memorial Day following Facebook's poor performance, according to sources who spoke with  The Wall Street Journal's Anuptreeta Das, Gina Chon and Brett Philbin

The company claims it has not "delayed" its IPO because--get ready for this rationalization--it never set a date. "We're waiting for market conditions to meet our requirements," Kayak spokeswoman Jessica Casano-Antonellis told WSJ. We can't completely blame Facebook for Kayak's stalled IPO. Kayak filed its S1 way back in the fall of 2010 and has postponed the road show before due to "market conditions" last fall.

The current timing, however, suggests Facebook had a lot to do with it. Just as the social network went around selling "likes" and "engagement" to investors the weeks of May 7 through 18, Kayak, on May 16, was said to be prepping for its own roadshow. Now, remember, at that time, Facebook talk was (mostly) all roses and sunshine. Reports depicted Facebook as oversubscribed and worth a whopping $42 per share. Then, after just one day of Facebook's public trading, Kayak announced its road show. At this point, Facebook looked like it maybe might recover to a respectable price. The social network ended the day where it started -- not the modest pop investors hope for, but not the over 25 percent decrease we've seen since then. (As of yesterday, Facebook closed at $28.19.) There was hope that Facebook would stabilize and show some sort of respectable market performance. That, as we now know, did not happen and now we see Kayak backing down.

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Kayak would have been the first Internet company to give it a go after Facebook, serving as a barometer for tech 2.0. But, unwilling to look like a loser company, it instead has forgone the process because Facebook, the selfish social media company it is, ruined their chances. "After Facebook’s tumble, investors are not willing to buy pie in the sky," president IPOdesktop.com, Francis Gaskins told Bloomberg's Serena Saitto. "Facebook makes money but it seems their wheels came off their growth expectations and investors are hungry for tech companies with high growth margins," he continued. Internet companies like Kayak, unlike hardware tech companies like Apple, have a hard time proving these "high growth margins" since money comes from murky business models like online advertising and engagement.

If even the most popular sites, like Facebook, can't make it, why would the market love Kayak? It hasn't been so kind to other, similar, freshly IPO-ed Internet companies, as this Wall Street Journal graphic shows. Besides Google, whose line lies above the others, most companies have seen modest increases, at most. Kayak doesn't want to start with a Facebook-induced fizzle. And, presumably, neither do other tech companies. Until Facebook's stock recovers -- if it ever does -- we can expect this type of hesitancy from now timid Internet IPO hopefuls.

This article is from the archive of our partner The Wire.