It feels a little bit like 1999. Vonage Holdings Corp (VG), a VOIP provider better known as just "Vonage" went public and raised a half-billion dollars without even pretending that it was going to actually show a profit anytime soon. In fact, last year the company lost $261 million (yes, that's a quarter of a BILLION) on $269 million in revenues. In other words, all of those funny ads that have bombarded TV for the past year were pretty expensive after all.

Obviously, the IPO was a huge bust. Shares fell almost 25% from $17.00 to $13.02 in the first week of trading--a signal that Wall Street simply doesn't trust the management of Vonage to deliver profits anytime soon.

But is this sell-off in Vonage a buying opportunity for sharp investors?

In a word: No. Just because a stock is down doesn't mean it's cheap. Vonage apparently has gone with the first-mover, "gain customers at any cost" approach to developing a base of customers. This is a high-risk strategy that I believe is likely to result in disappointment for investors.

The main reason I don't want to own Vonage is the focus is on price. I hate investing in companies that have to compete on price, especially when they can't win. Vonage has based its entire value-proposition on phone-bill savings. The problem for Vonage is that the savings come from VOIP technology, not volume or something unique that other VOIP providers can't match. For example, Voip.com offers the same technology with more features and benefits to the end-user at an even lower price than Vonage is bragging about!

In other words, Vonage has done an excellent job of informing the public that there is a technology out there called Voip that can save them tons of money on their phone service. I'm sure this must be seen as wonderful news to all of Vonage's up-and-coming competitors who don't have to worry about introducing the technology, but instead can focus on customer satisfaction, innovation and profitability instead of marketing.

Unfortunately for Vonage, it's not 1999. Investors have already been down the road of huge marketing budgets and zero-regard for profitability before and were appropriately burned in the dot-gone bust of 2000. The performance of the Vonage IPO last week proved that memories simply aren't that short.

Andy Swan is co-founder and head trader for DaytradeTeam.com.  To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.