Some May IPOs Defy Downturn
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In a recent column analyzing the debut performance of Internet IPOs launched last month, I noted that the average first-day closing price of Net stocks that went public in May was well below the average from previous months this year.
Now, as we head into mid-June, 22 of the 26 Internet stocks that began trading in May are selling either around or below their respective first-day closing prices.
But this column isn't about those stocks. It's about the ones that (so far) have managed to defy the powerful pull of this spring's Internet market slump, a downturn that has ravaged the market caps of some of the sector's highest flyers and turned the Internet IPO launch pad into mush pit.
The May IPO with the best aftermarket performance to date is that of StarMedia Network, the New York-based, Spanish language start-up that aspires to be the Yahoo! of Latin America. After closing at $26.06 in its first day of trading on May 26, StarMedia quickly jumped to $45.50 on Day 2, and hit its peak close of $61.19 on June 1.
Customer management and billing software vendor Portal Software has traded consistently in the mid-$40s (a brief late-May slide notwithstanding) since closing on its first day of trading May 6 at $37.38, or 167% above the offer price.
That slide came in the wake of the company's Q1 earnings report, in which net loss increased to $5.5 million from $2.1 million in Q1 '98. By the end of May, however, Portal had rallied, closing on May 28 at $49.13. As of Thursday at noon it was trading at $45.13, or 21% above the first-day close.
Online Visa card processor NextCard needed a boost this week from analysts who rated its stock a "buy" or "strong buy," endorsements that sent shares surging to $41.38 at noon Thursday, 24% above its May 14 first-day closing price of $33.50.
Until this week, however, NextCard had spent most of its time trading slightly below its first-day close, though well above its $20 offer price.
While analyst plugs often have only a short-term effect, investors' newfound appreciation of NextCard's first-mover status - right now it processes about 25% of all Internet credit card applications, a market that Donaldson Lufkin & Jenrette analyst Jamie Kiggen says could produce $19 billion in revenue - may endure at least until the company's next earnings report.
Another company that launched its IPO on May 14 also is among the best performers from that month's class. Shares of "eBusiness" services start-up Scient were trading at noon Thursday for $39, about 20% above the first-day closing price of $32.63.
Unlike NextCard, Scient's shares have traded above the first-day close almost since its IPO, peaking on May 28 at $50.13.
In a tough market with competitors such as Razorfish and Modem Media.Poppe Tyson, Scient has been able to attract attention, landing itself recently on the "companies to watch" lists of publications suchas Red Herring, Upside and Silicon Alley Reporter.
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