Why the Vonage IPO Flopped
I hope you didn't buy stock in Vonage when it went public on May 24.
It was the worst IPO in two years, according to the Wall Street Journal. Vonage set an offer price of $17 per share and ended the day at only $14.85. Today the stock is trading at around $12.
What went wrong for the VoIP darling, now 1.6 million subscribers (I'm one of them) strong?
The company simply spent way too much money in the early days of VoIP and must continue to charge $24.99 per month to recoup those R&D and marketing costs. That's way too much money for a service that is now offered free of charge by Skype (I use that too) and others.
It's only going to get worse for Vonage, which hasn't innovated anything except for more TV commercials since its VoIP service debuted three years ago.
Meanwhile, Skype is free and catching on, Verizon is charging the same $24.99 as Vonage but offering better amenities, and now Uniden is selling phones with Windows Messenger built in, enabling VoIP services that Vonage isn't.
Learn more about the Messenger-enabled phones and the abysmal Vonage IPO here.