Bid.Com flies as retail players plunge in
TORONTO, Nov 27 (Reuters) - Online auctioneer Bid.Com International Inc. (Toronto:BII.TO - news) saw its shares surge in frenzied trading on Friday, partly in tandem with overall gains in U.S. Internet shopping stocks, but also fueled by retail buying.
Bid.Com shares rose C$1.09 to C$4.65 on volume of more than 12 million shares on the Toronto Stock Exchange, topping the most actives list in an otherwise quiet day.
In the United States, stock in bookseller Books-A-Million Inc. (Nasdaq:BAMM - news) shot up $25.81 to $38.75 on expectations it would score big sales on the Internet during the current holiday shopping season.
''Bid.Com's kind of going crazy. I guess that the other Internet (stock), Books-A-Million, is kind of going crazy as well,'' said Jeff Milligan, U.S. investment specialist at Priority Brokerage.
The bookseller has said it will move onto the Internet and challenge Amazon.com Inc (Nasdaq:AMZN - news).
Forrester Research is forecasting that consumers will spend more than $3.5 billion to buy holiday gifts online this year, triple last year's sales of $1.1 billion.
Milligan added that Priority Brokerage had initially thought speculative traders, who move in and out of a stock in the same session, would be making the most of the Bid.Com deals but then saw retail investors hop on board.
''We were thinking of buying it at C$3.50 the other day and we just thought nah, people are just going to day-trade it. But they're not. People are actually making investments in this company,'' Milligan said.
Many of the block trades on Friday were through Yorkton Securities, which had completed a few equity financings for Bid.Com. Last week Yorkton had received an option on 400,000 warrants after a bought deal.
Another analyst, who declined to be identified, noted that the magic figure for Bid.Com is C$6, at which the company will be able to consider listing on Nasdaq.
He added that recent attention paid to the stock had helped propel buying.
Analyst Adam Adamou with Taurus Capital Markets cautioned that the on-line auctioneer is still in its early stages, like many cybersellers, and retail investors are overlooking that.
''In my opinion, the fundamentals of this company indicate that it is overvalued at these prices,'' Adamou said. ''This is Canada's version of Internet mania -- where people are buying this without understanding the company's business.''
Another analyst, who declined to be named, added that generally investors are hoping Bid.Com will fulfill its ambitions of turning a profit in the next fiscal year or so.
''A stock like that is trading on the possibility for the future,'' he said. ''You can't measure it on earnings.''
Overall, very few web-related retailers are making money and have to pour all their funds back into their companies, he said, but since they have already staked out their turf in the anticipated Internet gold rush, they might strike it rich.
($1 = $1.54 Canadian)
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