AWEB, ABTL
NEW YORK (CBS.MW) -- It filed to go public 10 days after rival Autobytel.com, but
Autoweb.com on Tuesday became the first online car-sales referral service to make its U.S.
stock market debut.
The Santa Clara, Calif., company priced its 5 million-share
offering at $14 each, above the initial $10 to $12 range listed in a
earlier IPO registration statement.
The stock opened for trading at 21 5/8 -- the first price at which
most investors could buy the stock -- and was changing hands at
about 22 as midday approached. CS First Boston is the lead
underwriter.
Autoweb.com (AWEB) and Autobytel.com (ABTL), which is expected to price 4.5 million
shares at $16 to $18 each Tuesday evening, compete in the burgeoning online car-sales
market.
The companies' basic business models are about the same. When a consumer decides to buy
an automobile through one of the Web sites, the nearest dealer in the company's network is
notified. The dealer then agrees to call the prospective consumer with a haggle-free,
competitive offer.
The two companies approach the business a bit differently,
though. Autoweb charges its dealer network a fee for every
referral, while Autobytel dealers pay a set monthly fee.
Renaissance Capital analyst Ken Fleming said Autoweb's model
has led to faster revenue growth for the company -- though its
$13.1 million in sales for last year still trailed Autobytel by more
than $10 million -- but has also led to some heavy turnover in its
dealer network.
According to Autoweb's prospectus, the company had about
3,900 network car dealers at the end of 1998 but lost about 60
percent of the dealers it had at the beginning of the year.
Fleming said Autoweb hasn't been as aggressive in marketing its
brand name as Autobytel has. Autobytel's marketing strategy,
under which it spent more than a million dollars a pop for
commercial spots in both the 1997 and 1998 Super Bowls, has
cost the company dearly. In 1998, Autobytel lost $19.4 million
vs. $11.5 million in losses for Autoweb.
The initial valuations of the two companies are likely to be
similar. Autoweb's $14 offering price puts its market cap at about $328 million, not including
outstanding options or debt, while Autobytel's estimated $17 offering price would give that
company an initial worth of about $304 million.
According to Web rating site 100Hot.com, Autoweb was the fourth-most-visited car- or
truck-related site, while Autobytel ranked eighth. Microsoft's (MSFT) CarPoint held the sixth
spot. Other competitors include Cendant's (CD) AutoVantage and Republic Industries'
AutoNation.
The automobile market is a gigantic one. U.S. consumers spent more than $670 billion in
1997 on new and used cars, according to CNW Marketing Research. Throw in sales of
automobile insurance and other related products, including replacement parts, and the market
stood at about $1 trillion, according to Autoweb.com's IPO filing.
And more and more people are scouring the Web for pricing or performance information
before they buy a car. Some 16 percent did so in 1997, and that number should rise to 50
percent by 2002, according to J.D. Power & Associates. See earlier story.
Fleming said the referral model is attractive because the sites don't have to worry about
inventory. "This can be a very high-margin business," he said, adding that it will be tough for
new competitors to break in once the established sites have formed their dealer networks. |
