IPO Aftermarket Loses Ground
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As "Austin Powers, The Spy Who Shagged Me" makes its way to movies the flickering image playing on Wall Street goes thusly: this ain't groovy baby as Internet IPOs are off 26% in two weeks of trading. This film is rated G for gee, what happened.
Quite simply too many deals chased too few dollars. Greed overcame the entire Internet sector both old (existing stocks) and new (wannabe IPOs).
Let's see the numbers:
|Company||Stock||3-Jun||20-May||Percent||Change from||Low %|
|name||Symbol||close||close||change vs. 5/20||IPO||vs. IPO|
|Allaire||ALLR||$ 44.25||$ 64.00||-31%||121%||70%|
|Autoweb||AWEB||$ 13.88||$ 18.75||-26%||-1%||-8%|
|eToys||ETYS||$ 46.69||$ 76.56||-39%||133%||118%|
|Healtheon||HLTH||$ 77.88||$ 100.63||-23%||873%||172%|
|iVillage||IVIL||$ 37.75||$ 54.00||-30%||57%||68%|
|About.com||BOUT||$ 34.25||$ 54.25||-37%||37%||16%|
|MarketWatch||MKTW||$ 52.50||$ 53.00||-1%||209%||165%|
|Marimba||MRBA||41 9/16||$ 52.25||-20%||108%||106%|
|OneMain||ONEM||$ 19.00||$ 24.00||-21%||-14%||-20%|
|Pacific Internet||PCNTF||$ 40.00||$ 51.50||-22%||135%||54%|
|Priceline.com||PCLN||$ 84.13||$ 134.38||-37%||426%||263%|
|Prodigy||PRGY||$ 22.75||$ 25.09||-9%||461%||33%|
|theStreet.com||TSCM||$ 28.75||$ 42.19||-32%||51%||49%|
|Verticalnet||VERT||$ 73.88||$ 92.25||-20%||362%||117%|
|Vignette||VIGN||$ 51.25||$ 71.00||-28%||170%||96%|
|WebTrends||WEBT||$ 25.25||$ 29.63||-15%||94%||69%|
Oldtimers issued secondaries and went on buying sprees in a consolidation frenzy that drove up values in the public sector while newcomers had little choice but to try and find the sizzle of a IPO market that only now shows signs of a reality check.
The alternative was to continue on the venture capital side of things at ever-increasing valuations that saw newbies like StarMedia (NASDAQ:STRM) go from being two guys maxxing out credit cards to fund their company to raising $100 million to shoot for becoming the Yahoo of Latin America.
I believe they may succeed because of their focus but the amount of venture money that flowed into the machine was quite frankly too much. They didn't need to raise $100 million on the private side.
Note that of the 15 stocks listed in the table only one, MarketWatch (NASDAQ:MKTW) held most of its own since May 20, off only 1%. Still, MKTW is a long way off its $130 per share high.
Compare the aftermarket performance of theStreet.com (NASDAQ:TSCM) which starts to look a little weak losing 32% and well off its high also. TSCM posted a 51% run from IPO price, a fair run in a group with a few that boast triple-digit percentage from IPO price.
Ironically, Healtheon (NASDAQ:HLTH) led the index here, up 873% from IPO price. The significant point there is HLTH delayed its IPO and priced at $8 per share.
HLTH role as roll up drives the stock. We'll see if it can maintain that edge in the paperwork-intensive healthcare industry where HMOs, PPOs, and enough acronym soup to lead one to read Chicken Soup for The Soul more than once.
iVillage (NASDAQ:IVIL) falls 30% since May 20 and I have to believe that IVIL may have gotten ahead of itself, more concept than revenue. I like its focus but think some real work has to be done to create shareholder value. Revenue is strong in the latest quarterly results but losses steep, too steep. A TV merger deal may make sense here since advertising ate a lot of IVIL's balance sheet.
I think the rural ISP subscribers look fairly valued at about $1200 each vs. the $1600 per sub valuation for larger metro or national ISPs like EarthLink (NASDAQ:ELNK). Since I'm thinking about ELNK it may be a good move for Sprint to acquire it outright, also grab PSINet (NASDAQ:PSIX) and have a full-service Internet and data network for the future.
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