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RealTime IT News

High-Flyers Feel Pull of Gravity - Or Rationality

It's been a fast fall for Amazon.com share prices in the past week or so. Since April 23 the online retailer has seen its stock nosedive from $210.13 - its all-time high closing price - to $143 when Tuesday's trading session ended. That's $67.13, or 32% of the stock's value.

But the company experienced an even bigger stock skid early this year, when it dropped $78.63 over a 10-day period, going from $184.63 on Jan. 11 to $106 on Jan. 21, a 43% plunge. The stock didn't regain its footing until after Feb. 18, when it closed at $89.50 before staging a nine-week surge.

The difference between then and now, of course, is that we don't know when Amazon.com's latest slide will end. Some investors fear the flagship e-tailer's sagging shares are a bellweather for the entire Internet market, which was rattled in April and remains unsteady.

Others welcome the current turbulence as an overdue antidote to this year's run-up of Internet stock prices. No company should be trading at absurd multiples of revenue, they say, and Amazon.com was selling at 33 times revenue as of May 1. Late last week Barron's estimated that the e-tailer's stock was worth no more than $25 if you take into account revenue, losses and gross margin.

While Amazon.com may have lost a lot of altitude in recent days, it is not the only high-flyer that has headed back toward Earth. Several other Internet stocks have fallen in value since late April. Here's a look at some of them:
  • Go2Net -- $177.50 (April 21) to $130.75 (May 4) - 26%
  • AOL -- $162 (April 26) to $127.13 (May 4) - 22%
  • Yahoo -- $192.25 (April 26) to $159.25 (May 4) - 17%
  • CMGI -- $281 (April 26) to $235.06 (May 3) - 16%
  • @Home -- $160.56 (April 26) to $135.69 (May 4) - 15%
  • Excite -- $160.50 (April 26) to $137.75 (May 3) - 14%
  • eBay -- $209.25 (April 27) to $181.25 (May 4) - 13%
  • RealNetworks -- $221.50 (April 30) to $200.06 (May 3) - 10%

One high-priced Internet stock that has bucked the downward trend is online banker Net.B@nk. The company closed at $178 on April 26 and rose up to $197.38 on Monday before finishing at $173.06 on Tuesday.

Latest Internet IPOs Fail to Reach Orbit

The two Internet IPOs that made their debut Tuesday continued the recent run of less-than-spectacular open days.

MapQuest.com, offered at $15 per share, closed at $22.38, a 49% increase. And Flycast Communications closed at $29.75, only 19% above the $25 offer price and the fourth-worst first-day performance of 1999.

Nine of the 14 Internet IPOs rolled out since April 14 have closed at less than 100% above their offer price. Of the first 33 Internet IPOs launched in 1999, 10 failed to reach 100% above their offer price on the first day.


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