Vonage's Train Wreck: A Compendium of Thoughts (VG)

Yesterday was not a good day for Vonage (VG). With a 12.7% freefall on its first day of trading, this is the biggest drop of any IPO this year. We've pulled together some of the initial feedback to the train wreck:

Andy Kessler: "Here's how not to do a deal. Citigroup raised the number of shares in the deal, but not the price. Bad move - it signaled some weakness. Worse was pricing it at $17, the mid point of the $16-18 filing range. It broke price in the first few minutes and then broke the bottom of the range in the first hour. Citigroup got paid their 7% fee, Vonage got their money to live another year or so, but now its a broken deal. Citigroup may be mopping up by buying shares. They almost have to - to get the egg off of their face."

Richard Greenfield, Pali Research: "It's very hard to see what their competitive advantage is. We basically believed, pre-IPO, that the price should be $10 or less." (from Globe and Mail)

Nicole Ridgway, Smart Money: "Given that it has fallen well below the offering price in the first day of trading, Morningnotes' Holmes expects that $17 will be where the stock will cap in the near future. Investors who bought in at $17 won't want to necessarily hold on to the stock in anticipation of it going higher if they can sell it and break even. One thing that bodes well for the stock, he says, is the 13.5% of shares in the offering that the company set aside for VoIP customers who wanted to invest in the service. Holmes believes those customers who bought shares must believe in the service. 'They are sticky hands,' he says. 'They will buy it and hold it'."

Anthony Sgroi, Bergen County, N.J., Vonage customer who received 300 of the 1000 Vonage shares he requested: "I'm not a big stock market guy. ... When I got the option to buy the IPO, I figured it was a chance to make some quick cash. I was planning to sell within a week or so anyway." (Sgroi sold his shares and is cancelling his Vonage account, moving to cable and saving $10 a month. "I'll try to recoup some of my losses that way." From Montgomeryadvertiser)

Catablast Media: "But let’s not pin everything on Vonage: The investment bankers really screwed up here — they should’ve priced the IPO lower, maybe at $10 or $12 — this would’ve lowered the amount they netted in fees, but the stock would’ve looked better. For all the talk we hear about bankers manipulating stocks, they let this one get away."

James Enck: "We shouldn’t ignore, nor disrespect, the powerful galvanizing force that this company has been for VoIP awareness generally. It would be easy to stand here with the benefit of hindsight and poo-pooh Vonage’s efforts. A little Googling will uncover some much more bullish assessments in the blogosphere from not so long ago."

VG First Day of Trading

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Additional recent articles on Vonage (VG) include:

Kevin Chou on The Worst Tech IPO Since Pets.com

John Ogg and Evelyn Rubin's quick previews of the IPO

The Stalwart on Vonage IPO Gets Uglier and Uglier

Himanshu Pandya on Skype's threat to Vonage

Andrew Schmitt on Vonage IPO, Grassroots Desperation

All Vonage coverage on SeekingAlpha

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