OpenTable IPO sets off feeding frenzy

It looks like today's initial public offering by OpenTable (OPEN) was overbooked.

Ravenous investor demand pushed the stock's IPO price to $20, well above the company's expected range of $16 to $18, which it had already boosted earlier this week in response to the buzz building around the deal. By mid-afternoon it had climbed another 46 percent, to $29.60.

All this on a day when the Nasdaq was falling nearly three percent amid concerns that worse-than-expected unemployment figures foretold a deepening recession.

OpenTable's IPO comes on the heels of yesterday's debut offering by SolarWinds (SWI), a software company that also outperformed on its first day of trading. Together, they're bound to get market watchers talking about whether the heretofore largely moribund IPO market is beginning to revive.

In particular, OpenTable's outstanding first day may point to that conclusion. While the company undoubtedly has many things going for it, it's a bit more of a speculative play than some other recent IPOs. While SolarWinds has a ten-year record of profitability, for example, OpenTable lost money last year. And because OpenTable already serves about a third of the reservation-taking restaurants in North America, some analysts figure its domestic revenue may max out at about $160 million a year, or about three times 2008's total.

Still, unbridled enthusiasm for an IPO by a company attempting to harness the web for profit may be a sign that investors are ready to invest in riskier offerings. That could be a good sign for a slew of other companies which had assumed they were locked out of the IPO market.
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