Whoa Tech Bubble, Go Green Bubble!

I lamented in a previous post that it appeared we were going to forgo a vitally necessary green bubble in pursuit of a second dot-com bubble. Rest assured though that Gordon Gecko is alive and well and not just focused on re-living 1999.

Gevo, (NASD: GEVO) a biofuels technology company, went public last week and according to their prospectus they sold 29% of their shares for about $120M. They had under $2M in revenue for the first nine months of 2010, and acquired an ethanol plant in September 2010 that did $32M in ethanol sales for the first nine months of 2010. They intend to convert the ethanol plant to an isobutanol plant and continue to sell ethanol until the plant is converted.

They have some great intellectual property and an exciting story to tell albeit they are losing money and the prospects of making the kind of profits that would justify a $400M value are uncertain at best. This is a company that would not have been able to use the public markets to fund their venture in past years, so I wish them and their investors well and hope they go on to change the world.

Meanwhile, over in the tech sector, Pandora, the Internet radio service filed their S-1 and although they don’t set an IPO price they do discuss an offer they had on the company recently that had them set the value of their subsequent stock option grants at $3.14/share after an unidentified party bought 2.5M shares from employees at that price. After the IPO there will be 150M shares outstanding, so it’s fair to assume they will be valued at no less than $450M. This against:

“Our revenue was $55.2 million and $90.1 million in fiscal 2010 and the nine months ended October 31, 2010, respectively. Our net loss was $16.8 million and $0.3 million in fiscal 2010 and the nine months ended October 31, 2010, respectively.”

Their revenue growth is phenomenal and they have definitely redefined streaming music – I am listening to Pandora radio instead of my own iTunes library as a I write this. Prior to the share purchase offer by the third-party they had valued their shares internally at a very reasonable $.94 as recently as June 2010, so it appears that even they were surprised by what investors were willing to pay.


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