NetSuite Keeps Climbing; What’s It Really Worth?
Posted by Eric Savitz
NetSuite (N) continues its VMware (VMW). The company, which came public yesterday at $26, and closed its first day of trading at $35.50, is up another $5.85, or 16.5%, at $41.35. That gives the on-demand enterprise software company a market cap of $2.46 billion. But remember that the float is thin: about two-thirds of the stock is held by Oracle (ORCL) founder Larry Ellison and trusts for two of his kids. As I noted yesterday, the dynamic feels a lot like VMware, in which a high profile IPO with a thin float came public, creating a share-shortage that drove up the price.
What’s the company worth? Well, my back-of-the-envelope match yesterday came up with a 2008 revenue estimate of $177 million (I simply extrapolated out their recent 67% growth rate), which now implies a price-to-revenue valuation of nearly 14x. That seems kind of insane…unless you use VMW as a comparison. VMW trades for 17x the Street’s revenue estimate for 2008.
Souce: Tech Trader Daily - Barron’s Online : NetSuite Keeps Climbing; What’s It Really Worth?
February 27th, 2008 at 7:50 pm
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