OpenTable Brings (False) Hope for IPOs

A hot website goes public, and investors go wild. Shares soar 59% on the first day of trading. “Is this really May 2009?” asks James B. Stewart of SmartMoney. The stock is OpenTable.com, which went public at $20 and is trading just south of $27. "The company seems to have chosen the worst possible time to raise capital," but don't get too excited, Stewart cautions: This probably isn't a turning point for IPOs.

Stewart considers OpenTable a uniquely exciting company. It revolutionizes the restaurant reservation process and "holds the promise of a rare quality I’m always looking for: the natural monopoly." Users and restaurants will flock to it because it’s the biggest, making it bigger and limiting competition. Don’t forget “that in this market, OpenTable’s owners preferred to be sellers rather than buyers.” (More OpenTable stories.)