Saturday, January 31, 2009

OpenTable Files for IPO

A very interesting company from the last internet bubble, OpenTable, has filed to go public. The online restaurant reservation site that was founded in 1998, is hoping to raise as much as $40 million in an IPO, according to a filing with the SEC. OpenTable provided a new channel for restaurants to attract customers via the internet. The website benefits from a strong network effect: the more restaurants that use it, the more valuable it becomes to consumers, and thus the more potentially valuable it becomes to restaurants not yet using it.

Nevertheless, it will be interesting to see how this offering pans out in the current economy. Overall restaurant revenues have declined as US citizens have limited their discretionary spending, such as dining out. As such, one would expect OpenTable's bottom line to also be negatively impacted by the economic downturn.

The last U.S. IPO in the technology sector was Web hosting firm Rackspace (RAX), in August of 2008.

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