NEW YORK — Facebook and Yelp are set to lead the biggest year for U.S. initial public offerings by Internet companies since 1999, testing demand for IPOs after investors lost money on Zynga and Pandora Media.
With Facebook considering the largest Internet IPO on record and regulatory filings showing that at least 14 other Web-related companies are planning sales, the industry may raise $11 billion next year, according to data compiled by Bloomberg. That would be the most since $18.5 billion of IPOs in 1999, just before the dot-com bubble burst.
While surging sales growth may lure investors to Facebook, the biggest social-networking site, heightened stock volatility and Europe’s sovereign-debt crisis could temper the pace of global IPOs after a 38 percent decline in 2011. Even Internet companies may cut valuations for their offerings after Zynga, the largest developer of games for Facebook, and online-radio company Pandora slumped following share sales this year, according to researcher Morningstar Inc.
Yelp, the consumer-review website operator, and e-mail marketer ExactTarget both filed for IPOs in November.
“Technology is still a place where you can get outperformance in terms of growth against a tepid market backdrop,” said David Erickson, New York-based global co-head of equity capital markets at Barclays. “You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market.”
IPOs raised $155.8 billion in 2011, compared with $252 billion a year earlier, and U.S. initial offerings generated $38.8 billion, about 10 percent less than in 2010, Bloomberg data show.
“Investors will take a harder look at the numbers going forward and need to see strong revenue and profit growth,” Morningstar analyst James Krapfel said.
