It's not likely to cause a big stir on Wall Street, but a San Francisco-based Internet company marked a cultural milestone Thursday by becoming the first gay-focused business to trade its stock on a major exchange. PlanetOut Inc., which operates several gay- and lesbian-themed Web sites, made an initial public stock offering of 4.65 million shares on the Nasdaq Stock Market. The stock opened at $9.26 a share and closed at $10.40, an increase of 16%.
In a nod to both its mission and as a statement of gay pride, PlanetOut adopted "LGBT"--an acronym for lesbian, gay, bisexual, and transgender--as its ticker symbol. While businesses catering to a gay clientele have appeared on the Australian Stock Exchange as well as smaller markets, PlanetOut has broken new ground by meeting the requirements for longevity and stability to get listed on NASDAQ, said Walter Schubert, a stockbroker who founded Gay Financial Network. "For years now, we've heard about the gay market and heard about how lucrative it is," said Schubert, who does not own any PlanetOut stock. "Here now is the first publicly traded company where those who are interested in taking advantage of an investment opportunity that's part of that market would find a pretty good opportunity."
Chief executive officer Lowell Selvin could not comment Thursday on the decision to take PlanetOut public because of security regulations that prohibit management from discussing their companies during the first few weeks after an IPO. In a prospectus filed with the Securities and Exchange Commission, PlanetOut said it hoped to raise $39 million through the IPO, money that would be used to bolster traffic at its Web portals--Gay.com and PlanetOut.com--increase the number of subscribers using its fee-based service for personal ads, and expand into more countries. The company is also considering using its strong online presence to move into other media, such as print, radio, or broadcast.
Unlike many other Internet startups, PlanetOut managed to survive the collapse of San Francisco's dot-com boom by broadening its sources of revenue to include subscriptions as well as advertising, by reducing expenses, and by adding new features, such as separate travel and shopping sites, that appealed to its members. The company posted its first profitable quarter in 2003 but has ended the each of the last three years with a net loss.
Justin Nelson, cofounder of the National Gay and Lesbian Chamber of Commerce, said that beyond what the IPO says about PlanetOut, it also sends an important signal to the rest of corporate America about the strength of the gay and lesbian market. "What this announcement says is that LGBT Americans are also businessmen and women, not just a social squeaky wheel," he said.