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Facebook's (Nasdaq: FB) initial public offering (IPO) failed to garner any real momentum for the first several months, and even dipped below $20 per share in late 2012.
At that time, many market watchers declared the social media bubble had burst, and investors of future social media IPOs were doomed to go bust.
However, FB stock has since surged. It's up more than 60% since its IPO, and more than 15% this year alone. Investors have nabbed a 140% return over the last nine months.
Facebook's turnaround has fueled excitement about future social media IPOs. Here's a look at two future social media IPOs slated to hit the market sometime in 2014…
Two Highly Anticipated Future Social Media IPOs
One of the most promising future social media IPOs is that of Spotify Ltd.
In February, the company began a public search for an employee familiar with financial filings common to IPOs, and so the rumors started to fly.
Spotify specializes in allowing users to listen to free music over a simple interface. However, the price of paying royalties for all that free music puts a major squeeze on the company's cash flow.
Its competitor Pandora, the largest free music streaming site with over 150 million users, experiences the same problem. Spotify is only about one-fifth of Pandora's size with 33 million users, but neither company has ever had a profitable year.
Last quarter, Spotify paid record companies over $38 million dollars in royalties. However Spotify does have a paid membership subscription which attributed $230 million in revenue last year.
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Pinterest Inc. is currently used by 20% of online adults in the United States, making it one of the largest social media platforms in the country. It's one of the leaders for referral traffic with over 38 million unique U.S. visitors. The site operates like a virtual scrapbook and allows users to "pin" anything from craft projects to vacation destinations to gourmet recipes.
In its last round of funding, Pinterest raised $564 million at a valuation of $3.8 billion. The site doesn't currently bring in any revenue, but analysts have estimated that the company could reach $500 million in advertising revenue by 2016.
Chief Executive Officer (CEO) and Co-Founder Ben Silbermann has not publicly discussed an initial public offering yet. In a January 2014 interview with The Wall Street Journal, Silbermann stated that the company's main goals at the moment are introducing advertising and creating revenue.
A Pinterest IPO may not be on the immediate horizon, but if the company proves it can create a strong revenue stream, that could easily change.
"Pinterest could be poised to take advantage of massive retail opportunities," social media consultant Eileen Brown wrote for ZDNet. "Pinterest has a perfect opportunity to excel in mid-tier e-commerce. It could become an e-commerce portal for businesses to showcase and share their goods. It already commerce driven as marketers seek to get their images repinned across the site."
Brown believes that the only thing holding back Pinterest from soaring retail sales is the capital needed to build infrastructure to make this possible. That makes the company a top contender in our list of future social media IPOs for 2014.
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