It is every investor’s dream to find the perfect IPO that continues to grow in the foreseeable future. Some IPOs flourish for years to come while others diminish within a year, if not months. Today, I will focus on four popular IPOs from 2011. By and large, I believe each of these companies will ultimately lose momentum.

HomeAway, Inc. (AWAY) engages in the provision of an online marketplace for the vacation rental industry. In my opinion, HomeAway needs to invest heavily in its website architecture. As competitors such as privately-held AirBnB have continued to chip away at HomeAway’s early mover advantage, HomeAway has failed to keep pace. The company’s website remains clunky and outdated by modern web 2.0 standards. What’s more, the company has generated a profit margin of 2.7% and a return on equity of 1.5% last year. HomeAway has a gross margin of 85% while its publicly traded competitor, Priceline.com, Inc. (PCLN), has a gross margin of around 69%. HomeAway’s operating margin of 9.8% is higher than the industry average of 4%. HomeAway is currently spending a large amount to ensure that its growth increases. This move may lead to lower earnings in the near future. I don’t see how the vacation rental market will consolidate to HomeAway’s advantage considering the small barriers to entry to enter the space.

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