Some more IPO news;;;
More Internet IPO Insanity On Tap For 1999
( 1/ 1/99; 12:00 PM EST)
By Tom Taulli, TechWeb
Following the IPO market is tantamount to witnessing an insane asylum. To understand the way it works, you need to study the teachings of Sigmund Freud, not Benjamin Graham.
In 1998, the insanity intensified, led by Internet IPOs. Here's look at some of the one-day performances in that sector: eBay:163.2 percent theglobe.com: 605.6 percent Broadcast.com: 248.6 percent uBID: 220 percent EarthWeb.com: 247.8 percent TicketMaster-CitySearch Online: 187.5 percent GeoCities.com: 119.5 percent Xoom.com: 145 percent
Even Internet IPOs that turned in sub-par performances were strong. For example, InfoSpace.com was up "only" 33.3 percent on its first day (the shares have since increased more than over 165 percent).
To quantify matters, there were 28 Internet companies that went public in 1998. In all, they raised $1.3 billion. The average percentage change in stock prices? An amazing 254.4 percent. Yikes! I've never heard the word "tulip" used so many times in the press as during the past few months.
Despite all this, expect to see many more 100+ percent first-day performances this year. There are millions of people getting online and signing up for online brokerage accounts. With dirt cheap commissions and the allure of quick money, floods of individual-investor cash will likely propel Internet IPOs. There are many investors who want to get in on the next eBay or uBid...
Of the 178 IPOs in the pipeline, 21 are for Internet-related companies. Some of the hot ones include: iVillage.com, the leading content site for women. IVillage.com has relationships with NBC and America Online. Allaire, which develops software to enhance websites. Vignette, which makes sophisticated relationship-marketing software for enhancing sales efforts. VerticalNet, a collection of business-to-business websites. I recently wrote about this company. Prodigy, which has been in existence since the 1980s, but has recently refocused its energies on being an ISP. CBS MarketWatch, a high-traffic finance site. FlashNet, an ISP that uses a network-marketing model to gain customers.
There are some other trends we'll see in 1999: More access to IPOs. Traditionally, hot IPOs have been allocated to wealthy individuals and institutions. But in 1998, we saw more individual investors get in at the "offering price" of IPOs such as GeoCities, TicketMaster-CitySearch, theglobe.com and eBay. The firms leading this trend are online brokerages like ETrade, Fidelity, Schwab and WitCapital. In 1999, with many exciting companies going public, we will see even more individual investors get into IPOs.
Regulatory Changes. Anti-flipping rules penalize investors who sell IPO shares within a certain period of time (say one or two months). The penalty could include a ban from participation in future IPOs. The theory is that underwriters want to prevent heavy selling, which could kill an IPO. However, anti-flipping rules mostly apply to individual investors. But the Securities and Exchange Commission is investigating this unfairly applied rule and I wouldn't be surprised if it puts a stop to this practice.
Spin-Offs. A spin-off is when a major company sells a subsidiary to the public. It can be a wonderful way to unlock shareholder value. With the success of the uBid spinoff (uBid is worth twice as much as its parent company Creative Computers), expect to see many more such spin-offs in 1999. Ziff-Davis has already announced it will spin-off its ZDnet division.
With the surge in Internet IPOs, don't be surprised to see many more high-profile websites go public in 1999. Here are some of my predictions of who will file this year: NextCard. The Internet is becoming the credit-card distribution channel of choice and NextCard is a leader. HomeShark. HomeShark.com helps make home buyers make informed decisions. In its latest round of financing, the company raised $38 million; an IPO is on the way. Tickets.com. The company is positioning itself to be the Yahoo of ticketing. It has the biggest ticketing database on the Web, with more than 50,000 venues and 140,000 events. The company also owns the phone number 1-800-TICKETS. theStreet.com. James Cramer, the highly prolific writer and hedge-fund manager, founded this financial site in 1996. It has about 26,000 paying subscribers and the company expects to post a profit next year. So far, theStreet.com has raised $22 million in private placements. Media Metrix. This is the largest provider of traffic ratings on the Web. The company has coverage on more than 15,000 websites. Auto-By-Tel. This company filed to go public in 1996, but withdrew its offering because of adverse market conditions. This year should be a great time for this Web company to go public. It is the leader in selling cars over the Web and is growing very rapidly.
© 1998 CMP Media, Inc.
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