IPO Filing: CreditCards.Com…Is This Ironic Or What?

August 10, 2007 by Douglas A. McIntyre

This morning we have had an IPO filing with the SEC from a company called CreditCards.com.  If this is not ironic because of the current credit meltdown and liquidity squeeze, then irony no longer exists.  The company filed to raise up to $115 million with underwriters listed as Credit Suisse, Citigroup, and Thomas Weisel Partners.  The ticker for NASDAQ listing has not been dedicated as of yet.

As you can tell by the name, this isn’t exactly a coffee shop.  The company is a credit card marketplace connecting consumers with multiple credit card issuers via the www.creditcards.com website.  This enables consumers to search for, compare, and apply for credit cards; and offers credit card issuers an online channel to acquire qualified applicants. CreditCards.com allows credit card issuers to seek and receive credit card applications online on what it hopes is and believes is more efficient and cost effective than traditional offline channels.

The company was founded only in 2005 to buy an online financial firm, and it bought the creditards.com, LP operations and domain name in 2006.  It obviously hasn’t paid attention to headlines about the credit markets in the last 2 or 3 weeks. 

The company shows revenue growth year over year.  In the first half of 2006 it posted $18.736 million in revenues and in the first half of 2007 it posted $27.358 million.  The company also spent over 80% of our total online advertising expenses in 2006 with Google and Yahoo!. 

It specifically warns that if it gets outbid or can’t compete on the amount it will pay for online ad placements that it believes it will not be able to replace the traffic that comes from those two sites.  To see how this worked I did a search on both Google and Yahoo! under the querie "credit card", and this was the top placement on Google search sponsored results and was the second sponsored result on a Yahoo! search.

Jon C. Ogg
August 10, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.