Rosetta Stone shares jump in public debut

NEW YORK — Shares of language-learning software company Rosetta Stone Inc. surged almost 40 percent Thursday in their public debut on the New York Stock Exchange.

It was the second IPO this week, raising some hopes that the market for initial public offerings may be reviving.

The market froze last year as the collapse on Wall Street wiped out investors’ appetite for stocks.

Many companies decided against going public because they wouldn’t be able to raise the money they needed from selling shares.

The Rosetta share offering raised $112.5 million as 6.25 million shares were priced at $18 a share. Half of the shares came from the company and half were sold by existing shareholders. The price was above the initial planned range of $15 to $17, according to Renaissance Capital.

The shares soared $7.12, or 39.6 percent, to $25.12 on Thursday. They trade under the ticker symbol “RST.”

Arlington, Va.-based Rosetta is not the first company to make its public debut in recent weeks. Ltd., which develops and operates online games in China, completed its IPO on April 7. Majority owned by Chinese Web portal Inc., Changyou priced at $16 per American Depositary Share, above its proposed range. On Thursday, the stock rose 2 cents to $27.31.

Bridgepoint Education, which offers online degrees, priced at $10.50 on Tuesday. The stock rose 95 cents to $12.05 on Thursday.

Kathy Smith, principal at Renaissance Capital, said the IPOs that are getting done right now tend to get done by stronger companies at attractive prices. After all, she noted, there are still problems with the financial system.

“It’s a buyer’s market,” she said. Buyers, she added, are calling the shots because they are not willing to risk capital unless the company is strong and the price is attractive.

Still, Smith said it’s a good sign when investors “are willing to invest not government money, but their own money.”

Rosetta Stone, which provides learning software for 31 languages over the Internet and CDs, said in a regulatory filing it plans to use its share of the IPO’s proceeds to repay outstanding debt and for general corporate purposes such as acquisitions.

Tom Adams, Rosetta’s president and chief executive, said the company has always looked to go public, something that “helps reinforce” the strength of its brand.

The company’s language training programs seek to replicate the way children learn their first language — without the use of grammar tables and memorization.

“We have had very strong sales growth and we feel good about where we are as a business,” he said, adding that the company wasn’t looking to make decisions about the IPO market the same way other businesses are.

Smith said Rosetta’s shares were being offered at a “very attractive price,” and investors like the company because it has a solid brand name and is profitable.

“We think that for a while the market is going to be selective, (it’s) going to be strong companies at attractive values,” she said.