Investors react cautiously to Vonage IPO

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Investors react cautiously to Vonage IPO

Investors reacted mildly to Vonage’s IPO today causing the stock to drop almost 15% on its first day of trading. 30 milllion shares were traded and the stock looks to end the day at around $14.50 a share. Vonage hoped to raise $531 million dollars of badly needed money by selling 31.25 million shares for $17 a piece.

Vonage is known for their flat-rate calling plans based on Voice over IP technology which routes calls over Internet data lines versus traditional phone networks. The company is facing fierce competition from cable and telephone companies, but its biggest competitor may be Skype.

Recently purchased by eBay, Skype has begun offering free outbound calling to regular telephone numbers until the end of the year. Skype customers previously had to deposit money to make outbound calls. Some analysts have called this a very smart move, while others believe it is dumping – a practice of selling your goods at a loss to gain market share.