10 IPOs that flopped
Jim Henson productions aside, you know a company is destined for hard times if the face of the business is a sock puppet. This online purveyor of pet products fended off other rivals during the dot-com boom and soon became a national brand. The company even had the top-rated ad in the 2000 Super Bowl. Pets.com went public later that year at $14 a share and raised $82 million.
There was just one problem. As the number of visitors to Pet.com increased, the more money the company lost. Turns out that the etailer was selling merchandise for approximately one-third the price it paid for them. (Takeaway: 'volume volume volume' only works if you're actually turning a profit on transactions). Pets.com tried to boost business by offering free shipping but simply couldn't afford the costs of transporting big bags of dog food and cat litter. The etailer announced it was closing its doors on Nov. 6, 2000. Pets.com stock had fallen from over $11 per share in Feb. 2000 to nineteen cents the day the business was shuttered.