RealTime IT News

Internet IPO Market Stays Hot But Aftermarket Softens

Taxi drivers talking about Internet stocks as easily as they once discussed the weather may sound kind of strange but it happens everywhere I go. The topic of travel this week: new IPOs continue to do well while the already-public may have seen their spurts for now.

Prima facie evidence meters in courtesy of the metermaid IPODEX, off 5% as a group on average from April 22 through April 29.

Community on steroids Mpath (NASDAQ:MPTH), which debuted yesterday, ran 181.25% on its first day to $50.625 per share. That gives the firm a market value just north of $1 billion.

Mpath trades at more than 126x last year's revenue and about 60x my estimates for 1999.

With its boatload of shares outstanding Priceline.com at $19 billion market cap trades at more than 500x last year's revenue and more than 200x my estimate for this year.

Let's see the existing table of other Internet IPOs:

internet.com's IPODEX

Company Stock 28-Apr 28-Apr 28-Apr High % 28-Apr Low %
name Symbol close vs. 22-Apr % of high vs. IPO % difference/low vs. IPO
Allaire ALLR $68.44 6% -9% 278% 101% 70%
Autoweb AWEB $27.44 4% -45% 257% 40% 40%
Healtheon HLTH $47.25 -7% -23% 672% 117% 172%
iVillage IVIL $80.06 -16% -38% 442% 24% 168%
MiningCo MINE $67.25 3% -33% 300% 45% 86%
MarketWatch MKTW $72.50 1% -44% 665% 29% 229%
OneMain ONEM $31.56 12% -32% 113% 26% 14%
Pacific Internet PCNTF $78.00 8% -25% 513% 197% 54%
Prodigy PRGY $26.88 -13% -47% 238% 34% 33%
Verticalnet VERT $116.75 -17% -22% 831% 236% 117%
Vignette VIGN $86.25 0% -23% 488% 132% 96%
WebTrends WEBT $49.50 -14% -41% 546% 125% 69%
  TOTAL 751.88 -5% -31% 421% 85% 94%
  AVERAGE 62.66 -5% -31% 421% 85% 94%
  MEDIAN 67.84 4% -26% 441% 125% 77%

When I ran the sort of the top performers the first thing that struck me was how "right" the numbers looked on a valuation basis. ISP rollup OneMain (NASDAQ:ONEM) hasn't had the kind of respect that the segment warrants in my opinion, trading 14% off its low. With a wide open field to roll up it's a wonder how EarthLink (NASDAQ:ELNK) and Mindspring (NASDAQ:MSPG) seem to be running to stand still. 5,000 ISPs in the U.S. alone await a rapid buyer.

Mindspring has been an active hunter but EarthLink has always relied on marketing its way to growth. I'm not sure that marketing alone can get EarthLink to the #2 slot that I know Sky Dayton wants to get to. The first million is easy, it's the next 3 or 4 million that's a key in my book. AOL has 17 million subscribers to its core online service, not counting Compuserve.

Pacific Internet (NASDAQ:PCNTF) came back after losing ground against its peers, up 8% since April 22. The challenges for PacNet may be cultural and regional differences. Being an "Asian" ISP sounds great up front but Asia is home to dozens of races, languages, governments, ways of life, income levels, differing Internet access levels.

On the worst performers the past week VerticalNet (NASDAQ:VERT) loses some steam and I think the market may be seeing the difference now between business-to-business potential and where VerticalNet is today. The valuation gap became apparent.


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