Kayak Prices $100 Million IPO at $25 a Share | Hacker News Reader

Kayak Prices $100 Million IPO at $25 a Share

allthingsd.com

49 pointsjchernan24 comments

Headline is wrong. They are _raising_ $100 million with an initial offering that values the company at about $1 billion

Yes, therefore it's a $100 million IPO.

Amazing numbers.

Technically I am sure the site is not that complex. But I use it for 75% of my bookings. And so do many other people..

The headline isn't -wrong-, but it seems misguided. Journalists have a bizarre habit of focusing on the amount to be raised and completely omitting the projected market cap from the story. I'm on my phone and that's the last place I want to be reviewing S-1's to find out that most crucial number. Thanks for doing that

Maybe this is because they talk to bankers. Bankers only care about the amount raised because that determines their fee. Anyone else that I can think of is more interested in the market cap.

They raised $196 million round in 2007 from Sequoia Capital, General Catalyst Partners and Accel Partners.

That stake is now worth $254 million for General Catalyst. Sequoia Capital's stake is $150 million. Accel's investment is now worth $120 million.

... that's $524 million on a $196 million investment, after 5 years. Hardly spectacular.

It's about 25% annualized returns for 5 years. Spectacular if it were risk-free. Depending on how much risk you think they were taking on at that stage (probably not much, given how proven out the model was) it's still very good returns.

Late stage venture capital does not seek the kind of 1000x returns that early stage does.

Perhaps I'm misreading things, but it says Sequoia pumped in 196 million, but its stock value of equity at launch will only be worth 150 million. Does that mean they will be 'losing' money on the investment, until the stock goes up?

I read it as meaning the 196 million came from a combination of Sequoia Capital, General Catalyst Partners and Accel Partners, so I think they are still making money.

That made much more sense, I saw it as 196mm from Sequoia (of the 223mm raised total) with the rest coming from the other VC's.

You're misreading, I think.

They're offering $100mm in new stock at IPO, but they are only offering x% of the company in that IPO. So the total market cap is $100mm/x%, about $1b. (I'm going to cheat and read the filing and then change X to the correct value, but I think it is 10%).

Wouldn't that depend on what percentage of the company they are offering? I believe they have ~26 million shares total (from a previously filed S-1), and are offering 4 million...

Good to see an IPO with a value I can kind of fathom and believe instead of, you know, $X BILLION! or something.

That's just the value of the shares being sold, which is a small part of the overall number of shares. The valuation is around $1 BILLION.

Which, interestingly, is 1/6th the market cap of Expedia. Perhaps they've done an actually valid valuation?

Expedia should have little to do with it. Kayak's growth, revenue and profits are what matter.

Yes; however, this is an existing business in the same market. If they're reasonable competitiors and are getting about the same amount of business (or are gradually growing in their business), then you could expect them to be worth something similar. At least that's my thoughts on their entry into the market.

Why do these articles alway hide the cap table?

What Kayak is really good in: If you have flexible dates. It shows you best fares found for each day.

Otherwise I don't see why Sites like http://www.vayama.com/ or not the same. Besides the brand, what is their unique selling point? ebay, AirBnB has high entry levels. But a site to compare flights?

I'm interested in everyone's thoughts about Kayak.

My feeling is that slowly but surely, the travel sellers who buying leads from Kayak will start paying less. So while I see it as a successful business, I'm not really sure where they're planning to go from here.

It will be interesting to see how Kayak fends off increased competition from imitators/similar sites... Google, Bing, Hipmunk etc. Google actually owns ITA, which is the source of about 40% of Kayak's data. Whereas 5 years ago, Kayak had a pretty lucrative niche as a nice UI on top of other people's data, their survival will depend on aggregating across a wider set of sources: hotels, cars and cutting new deals with airlines.

As a user (a pretty hardcore travel optimizer, buying either absolute cheapest complex fare, or "value" premium fares), Kayak is one of the few travel sites I actually like.

Someone from there (CEO? CTO) has posted on hn and/or quora and seemed really smart, too. Obviously they're in quiet period now so won't be commenting.

They seem pretty flight-optimized, at least for me, which is a much lower source of revenue than hotels. If they can grow their standalone hotel res business, or add hotels to flight purchases, they'll be worth a lot more than even being totally successful on flights. (I book all my hotels direct with starwood or with the property on negotiated rates, though, or use airbnb or a few specialty negotiated-rate networks like Tablet).

"four million million shares"? daaamn!

While I have traveled a lot for work the past few years, I have never used a single travel service like kayak, hipmunk, priceline, etc...

I go to one place for my tickets typically - the airline. My airline of choice is Virgin which has fantastic prices anyway.

When I had a client in Nome alaska, and I was there one week per month, I used virgin to go to SEA then alaska airlines from SEA on.

I know I am in a weird bracket, but i just never felt comfortable with any of the third party ticket services.

It reminds me of whenever i go to a farmers market. I never remember the prices at whole foods/safeway and I feel like I am not getting a deal, but am being fooled by the illusion of a farmers market.

Hipmunk > Kayak

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