NEW YORK ( TheStreet) -- The $260 million initial public offering of electronic music festival producer SFX Entertainment (SFXE) signals that not only is the music playing in IPO markets, you've got to get up and dance.
But this offering could also indicate a bubble-like mentality spreading in IPO's, as investors and bankers try to launch the next billion-dollar business on public stock markets. If the company's primary business is putting on electronic dance festivals, investors would do well to question whether they are arriving late to the party.
SFX Entertainment is a deeply unprofitable business that faces large competitive and legal risks. Nevertheless, the company is selling shares in an unusual IPO at a price that gives the firm a valuation of over $1 billion.
The company's founder Robert F.X. Sillerman, however, has a significant track record in the concert and promotion industry after creating LiveNation (LYV), a company he sold to Clear Channel for over $4 billion dollars, and CKX, Inc., a vehicle he used to acquire rights to Elvis Presley's Graceland estate and the hit TV show American Idol. Sillerman sold CKX to Apollo Management in 2011.With SFX Entertainment, Sillerman is seeking to grow the electronic dance music
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