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To: Scott Kleinhans who wrote (466)	11/23/1998 10:49:00 AM
From: Platter	Read Replies (1) \| Respond to of 1634

From TheStreet.com.."Silicon Babylon: Are Net IPOs out to Lunch? By Cory Johnson West Coast Bureau Chief 11/22/98 6:38 PM ET SAN FRANCISCO -- To the likes of Emeril Lagasse and Julia Childs, "done" is an ill-defined phrase. It might mean pink in the middle or just lightly glazed. But such half-baked notions don't fly on Wall Street, where done means just one thing: the distinct opposite of "not done." Two initial public offerings in the Internet sector got "done" with much hoopla two weeks ago -- but after sitting around for a while, they're starting to stink. On the evening of Nov. 10, J.P. Morgan priced EarthWeb (EWBX:Nasdaq) at 14 a share, and the next morning the stock shot up to 59. That eye-popping 321% gain generated headlines from a shocked -- shocked! -- business press. A day later, theglobe.com (TGLO:Nasdaq) was offered by Bear Sterns at 9 a share, and rose to 97 in the first hour of trading. Investors, it was said, were warm to Net stocks again. But a week later, it's increasingly clear that the numbers of "investors" interested in these Net stocks were few and far between. After hitting a high of 85 1/16 on Nov. 13, shares of EarthWeb were trading at half that a week later. Shares of theglobe.com were trading as low as 32 1/16 a week after some fool paid three times that much. So what gives? These stocks attracted far more traders than investors. EarthWeb and theglobe.com were serving as primarily trading vehicles. Just 2.1 million shares of EarthWeb were offered, yet 11.52 million traded on the first day out. Theglobe.com offered 3.1 million shares and traded 15.66 million. Lucky traders with connections to the underwriters unloaded shares as fast as they could. "I sold my TGLO at 88 -- who wouldn't?" says Seth Tobias of the Circle-T Partners hedge fund. "Any institution that got 10,000 shares is selling the stock. Nobody is sitting on it up 90. Why do you think TGLO went from 97 to 35? There were no real buyers." Oddly enough, a lack of sellers in EarthWeb may have exacerbated the volatility of the stock. Investors actually holding on to newly minted shares effectively kept them off the market. So short-sellers -- who borrow shares of a stock in a bet that it will go down -- had difficulty finding shares to borrow. In a frenzy, many bought shares just to short them. That quickly jacked up prices, which in turn drew short-sellers like ants to a picnic. Which, of course, drove the price up even faster. "The next thing you know, there's nothing floating out there," says Tobias. "The market-makers get short, and they have nothing to borrow out there. So they start buying. Buying becomes buying, it becomes one giant hot potato." The same thing has happened to other Net stocks, but over much longer periods. Amazon.com (AMZN:Nasdaq) has been a rich target to hungry short-sellers, but despite big swings and short squeezes in June and July, it has yet to fall. Many a short has been crushed in the process. Last month, the last for which figures are available, Amazon.com had a short interest of 7.4 million shares -- relatively low given that 5.2 million shares trade on an average day. The stock refuses to go down, and shorts, at this point, are just afraid of it. "I don't know how people who are short Amazon bleeping breathe," says one short-seller who asked not to be named. "I don't care what you think of the Internet, that thing is a short killer." But the insanely rapid rise and fall of EarthWeb and theglobe.com have given doubters a new chance to short the Net. "The real story is that these deals got done at all," says Tobias. "People wanted another Internet stock out there. But one of these days these the same forces will drive these stocks lower." It's something to chew on. "