Will Classmates.com Have A Successful IPO?

Classmates.com is preparing to be the first social network to ever file for an IPO. The company is expected to raise between $120 and $144 million when they go public. That’s pretty good for a company that lost close to $2 million last year and close to $8.2 million the year before. While it appears that the company is on track to soon move into the black, much of the money being raised will be used to pay of the significant debt that the company has amassed in growing their user base.

Classmates.com may not be the hottest stock though. While their user base has grown, Compete.com shows that the number of active users each month has stayed relatively stagnant over the twelve months ending in October of this year. Back in February, Classmates.com was roughly the same size as Facebook in terms of active users. Since then Facebook has doubled in size while Classmates.com has apparently grown by a marginal amount.

I would guess that the investors are looking for a way to wipe out their debt and reduce their overall risk exposure. I’ve never been a member of Classmates.com but then again I’m not a member of their target demographic. Additionally, Classmates.com has lost the long-term battle to Facebook who has more than 90 percent of all university students registered on their site. Would you buy Classmates.com stock?