Should CareerBuilder go public?
A New York investment banking firm thinks so and suggests that its market value could be as high as $2 billion. In comparison, Monster’s market cap is $3.1 billion at this morning’s opening share price of $24.05.
Evercore analyst Douglas Arthur said the notion of CareerBuilder going public might be considered “far-fetched,” but added, “… one must ask if CB’s full market value is being properly realized.”
Arthur estimates CareerBuilder’s 2010 EBITDA (earnings before interest, taxes, depreciation, and amortization — a standard method of accounting comparison) to be $132 million this year and $177 million next. Monster is expected to lose money for the year.
How accurate Arthur’s earnings estimates are is questionable. CareerBuilder releases only its North American revenue numbers ($414 million through the end of the third quarter). It says nothing about its expenses or its revenue from operations elsewhere in the world. Estimating revenue and earnings for CareerBuilder is, as Arthur’s report notes, “more art than science.”
Even so, Arthur points out that market values for the publicly traded job sites (Monster, Dice Holdings, and 51Job) have risen a combined 94 percent in the last two months. Monster alone has gone from a low of $10 a share in the last year to today’s $24.16.
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He also notes that CareerBuilder is the largest job board in the U.S. with 36 percent of the market. Monster has 25 percent (not including HotJobs), Dice has 6 percent, and all the others account for the remaining 34 percent.
Complicating an IPO is CareerBuilder’s fractured ownership. Three newspaper companies — Gannett, Tribune, and McClatchy — own 96 percent, with Microsoft holding 4 percent.
A CareerBuilder spokeswoman says the company has no plans for an IPO, but declined to comment on the financial estimates.
“Even so, Arthur points out that market values for the publicly traded job sites (Monster, Dice Holdings, and 51Job) has risen a combined 94 percent in the last two months. Monster alone has gone from a low of $10 a share to today’s $24.16.”
This sounds like a bubble. There is no way this short-term spike can persist over time.
IPOs’ make Investment Firms a ton of money. How do you sell an Organization like CB on one? By saying, “you’re not realizing your full market value.” . . .
Going public brings a slew of other issues to the table. Not all companies aspire to Wall Street criticisms and pressures for more and more top-line growth, or for that matter, disclosing compensation figures for top Officers in the company. I guess you could say that aspiring to reach “full market value” comes with its own costs . . . and sometimes, you’re happy about things the way they are. Just because you can afford a 5k sq ft house in the Hamptons doesn’t mean you should buy one.
If CB needed to raise significant capital for some reason, I could see an IPO making sense . . . but until then, perhaps they like the lower cost-of-capital afforded by long-term, traditional debt.
I think that it’s a matter of perspective, Josh – one man’s bubble is another man’s rebound, and Monster was trading at over $57 back in April 2006. IMHO, the stock market is a less the perfect marketplace that is so often touted, and more a creation of mass psychology, both on positive and negative rumor and information.
I agree that going public sounds like an exercise in frustration, but I would not be surprised if CareerBuilder’s investors were interested in making their investment a little more liquid, especially the newspaper companies, who as a group are already having trouble with making payments on their existing debt.