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RealTime IT News

Internet IPOs Run From Lows

Anybody who would have bought an Internet IPO in this table shown at the low would be up at least 13%. Some would have enjoyed as much as a 303% pop from the depths.

As a group these stocks gained a blended 94% off their lows and as of yesterday's close were off the highs by 28%.

Through April 22 the top runner was up 775% from its initial public offering. Stats:

Company Stock Shares IPO share 4/22 change from High % Low %
name Symbol sold price IPO vs. IPO vs. IPO
             
VerticalNet VERT 3.50 $ 16.00 775% 831% 117%
Pacific Internet PCNTF 3.00 $ 17.00 324% 513% 54%
WebTrends WEBT 3.50 $ 13.00 341% 546% 69%
Healtheon HLTH 5.00 $ 8.00 538% 672% 172%
Vignette VIGN 4.00 $ 19.00 353% 488% 96%
Allaire ALLR 2.50 $ 20.00 223% 278% 70%
Prodigy PRGY 8.00 $ 15.00 107% 238% 33%
iVillage IVIL 3.65 $ 24.00 296% 442% 168%
MiningCo MINE 3.00 $ 25.00 162% 300% 86%
Autoweb AWEB 5.00 $ 14.00 88% 257% 40%
MarketWatch MKTW 2.75 $ 17.00 323% 665% 229%
OneMain ONEM 8.50 $ 22.00 28% 113% 14%
  TOTAL 52.40 210.00 276% 421% 94%
  AVERAGE 4.37 17.50 276% 421% 94%
  MEDIAN 3.58 17.00 282% 441% 77%

The biggest surprise in the bunch to me is VerticalNet (NASDAQ:VERT) which hovers 9 points off its all-time high. The industrial community (vertical) Web site service reported $1.9 million in revenue for first quarter ending March 31, up 412% vs. 1Q98. Net loss was $5.6 million vs. $5.3 million net loss for 1Q98.

The surprise isn't in the results but in how investors have driven this stock to a $2.35 billion market cap. That's 309x annualized revenue. On a generous $20 million sales estimate for 2000 the multiple is over 100x.

I think two things could be at play here: 1) investor's genuine enthusiasm for business-to-business Internet stocks; 2) but I also believe investors may be confusing the B-2-B opportunity (which is huge) with one company's potential (which is perhaps bigbutnot yet).

One stock I find more encouraging at these levels and more pleasantly surprising could be Healtheon (NASDAQ:HLTH). In my pre-IPO analysis I was bearish on this stock for one plain reason, the healthcare system in the U.S. is very unwired. The path forward I mentioned for Healtheon at that time was in acting as a roll-up magnet.

Go public, get aggressive and acquire the missing pieces to grow a strong Web presence and Internet-based information and commerce system.

Healtheon announced a $460 million stock swap for healthcare transaction software firm MEDE (NASDAQ:MEDE). The irony is Healtheon first delayed its IPO last year and debuted this year at $8 per share. At $51 Healtheon looks undervalued to me with its new public leverage just starting. Its next step ought to be to acquire Drugstore.com perhaps.

question of the day:

will the market for Internet IPOs stay hot?

email "yes"or "no" in subject header

results next week in emailbag monday!

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Accolades:

"Fresh and provocative" -CBS Marketwatch, who named Steve Harmon one of the top Internet stock analysts and only independent one honored

"I am a huge fan of Steve Harmon's analysis" -Kleiner Perkins' John Doerr