Personal finance site Bankrate.com goes public, shares rise

Bankrate.com, a personal finance website that has three dozen business journalists working for it, went public on Friday, but its shares fell in initial trading.

Its shares were trading at $14.74 as of 1:30 p.m. EST, down from its offering price of $15. UPDATE: Bankrate, which began as a newsletter in 1976, saw its shares close Friday at $15.34, up more than 2 percent from the offering price.

Its S-1 filing with the SEC states, “We also develop and provide web services to over 75 co-branded websites with online partners, including some of the most trusted and frequently visited personal finance sites on the Internet such as Yahoo!, AOL, CNBC and Bloomberg. In addition, we license editorial content to over 100 newspapers on a daily basis including The Wall Street Journal, USA Today, The New York Times, The Los Angeles Times and The Boston Globe.”

The filing also states, “Our editorial staff of 33 editors and reporters, 90 freelancers and 15 expert columnists delivers ‘best in class’ content and provides news and advice through over 150 new articles per week on top of over 50,000 stories in our database.”

Lynn Cowan and Chris Deiterich of Dow Jones Newswires write, “Bankrate makes money primarily through display advertising, performance-based advertising and lead generation. Its revenue and operating income have been on the rise since Apax took it private, but interest expense on a debt load that totals nearly $300 million has weighed heavily on its bottom line. In the first quarter, revenue nearly tripled to $99.1 million, and the company reported operating income of $18.6 million compared to $608,000 in the same period a year earlier. It posted net income of $5.1 million compared to a net loss of $5.2 million in the first quarter of 2010.

“Visitor traffic to Bankrate’s websites tends to increase with interest rate movements, and the level of traffic can be dependent on interest rate levels as well as mortgage financing and refinancing activity. The company warned that any slowdown in mortgage production volumes could have an adverse effect on its business.

“Bankrate is hoping for a strengthening U.S. economic recovery, a prospect fraught with increased uncertainty in recent weeks. In its prospectus, the company said that demand for financial services is generally correlated to the growth of the economy. Financial institutions’ online and traditional marketing spending is expected to increase if things improve. For example, in 2010, major credit card companies increased advertising and lead generation spending after significantly cutting their budgets in 2008 and 2009.

“It is also in a highly competitive market, up against other websites, search engines and offline sources such as banks and insurers.”

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