Monday, April 20, 2009

Rosetta Stone

Language-learning software company Rosetta Stone (RST) went public in a rather nifty IPO on Thursday amid little fanfare. You still can't get a quote for the stock on Google Finance but I'm sure they're busy.

One of the things this market needs is some good IPOs. RST rose 40% on day one. Good, or even frothy IPOs accomplish three things. They make:

  1. investors both retail and institutional feel better about buying stocks
  2. institutional investors feel better about risky assets in general
  3. venture capital and private equity guys feel better about committing capital. If the IPO liquidity event is not a possibility for these private investors, money tends to flow much more slowly

I'm not sure whether RST will work from here. It might. Learning a new language is like getting in shape - it's easier to join a gym or buy some software than it is to do it.

Morgan Staney was lead underwriting and they know how to coach a company into a position to beat-and-raise for the first few quarters.

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