Classmates.com IPO: What Are These People Thinking?

The IPO market is pretty shaky right now, but that's not stopping Classmates.com from trying to capitalize on the social networking mania.

The company, which helps people hook up with former classmates or coworkers, filed anS-1 with the SEC last week for an IPO of 12 million shares at a proposed price of $10 to $12 per share. For 2006, Classmates posted a $1.9 million loss on $139.4 million in revenue.

Is the stock a buy? We're not billionaire investors here, but we'd rather buy a $12 hot dog than a share of Classmates.com. Cowen & Co. analyst Jim Friedland is also pretty bearish -- especially since Classmates.com is up against the big boys of the web. Friedland wrote in a note published today:

We think Facebook is "the Google" of social networking
and expect users to migrate en masse to the free service driven by (1) superior
site functionality, especially in search; (2) highly flexible privacy features; (3)
an open development platform, which has resulted in an explosion of free
social applications that are integrated with Facebook.com; and (4) unobtrusive
and increasingly relevant ads.

Still, since there really isn't any other way for investors to get in on the social networking hype, the stock may find a few eager buyers.