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| Robert Sillerman |
SFX Entertainment, a young company created to capitalize on
the electronic dance music craze, opened for trading on Nasdaq at $13 a share,
and after dipping as low as $10.64 the stock closed at $11.89, down 8.5 percent
for the day, according to NY Times Dealbook.
SFX raised $260 million in the sale, which valued its
business at slightly more than $1 billion.
The stock’s performance is to some degree a referendum on
the value and perceived longevity of electronic dance music.
SFX, founded a year ago by the media impresario Robert F. X.
Sillerman, has been buying festivals, promoters and other businesses like the
online store Beatport, hoping to consolidate the dance audience and attract
corporate sponsors. These deals have already made SFX a competitor to
established concert promoters like Live Nation Entertainment.
Mr. Sillerman, who in the 1990s transformed the concert
industry by consolidating dozens of regional rock promoters — which he sold to
Clear Channel Communications in 2000 for $4.4 billion — described electronic
dance music, or E.D.M., as the “universal, borderless language” of the young
generation around the world.
But this offering could also indicate a bubble-like
mentality spreading in IPO's, as investors and bankers try to launch the next
billion-dollar business on public stock markets.
According to TheStreet.com, if the company's primary
business is putting on electronic dance festivals, investors would do well to
question whether they are arriving late to the party.
SFX Entertainment is a deeply unprofitable business that
faces large competitive and legal risks. Nevertheless, the company is selling
shares in an unusual IPO at a price that gives the firm a valuation of over $1
billion.
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