Leading Internet stocks continue rally
Reuters Story - September 02, 1998 19:35
SEATTLE, Sept 2 (Reuters) - Leading Internet stocks came roaring back to life Wednesday as investors scooped up issues
that suddenly looked like bargains after a storm of selling battered the sector over the past week.
Amazon.com Inc was up 6-/35/64 at 85-1/2, Yahoo Inc was up 6-3/16 at 78-7/16 and Excite Inc was up 3-3/8 at 27-3/8 in
heavy Nasdaq trading. On the Big Board, America Online Inc was up 4-3/8 at 89-1/2.
While the stocks all remained well below the soaring heights of earlier this summer, analysts said the strong rebound
demonstrated that Internet fever was still captivating many investors.
"When you see an Amazon run up to 150 and then it comes all the way back to 80, I guess you sort of forget about the bottom
line and say it's got to be a bargain at 80," said Miles Russ of Wheat First Union.
"It's sort of that 'irrational exuberance,'" Russ said,borrowing the expression coined by Federal Reserve Chairman Alan
Greenspan in a December 1996 speech.
Derek Brown, an Internet analyst with Volpe Brown Whelan & Co, said a combination of factors was driving up Amazon and
other Internet stocks. "The most important one is a rebound of the market in general," he said. "With that said, leading
companies are going to rebound the strongest, and I think you're seeing that today."
Tony Blenk of Everen Securities said Amazon.com was a unique case that presented an "unusual opportunity" despite a
valuation that is extremely high by virtually any traditional measure.
"People have come to realize that Amazon.com is a very unusual company that has the power to change the market in which it
participates," he said. "Although quite expensive from the point of view of price to revenues, say, the stock of this company is
one which there will be few opportunities to acquire, and those opportunities should be capitalized upon.
Even with the stock run-up, Amazon.com remained 40 percent below its record high set this year, while America Online was
35 percent below its peak and Excite was off nearly 50 percent.
But other Internet companies, not perceived as category leaders, were doing much worse. CDNow Inc. , for example, was
trading at 9-13/16, compared with a high of 39, while N2K Inc was at 8-9/16, off a peak of more than 34.
Blenk said Internet companies he follows were down an average of 60 percent from their peak after Monday's market tumble.
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