RealTime IT News

Internet Stocks Put on After-Market Burners

In recent weeks there have been a number of media stories about the poor performance of Internet stocks in the long run.

Through May and most of June, many analysts and commentators, seizing upon the slump that gripped the Internet sector in mid-April, were quick to point out that most Internet stocks were trading below their initial IPO prices.

While that certainly was true then, it isn't today. A look at the Internet Stock Report's IPODEX shows that through last Friday, shares of more than half the Internet companies that launched IPOs in the past three months were trading above their first-day closing prices.

Specifically, 45 of the 75 companies listed in the IPODEX were up at the end of Friday's market session relative to their closing prices on the day of their IPOs. (I'm not counting Liquid Audio, which actually went public on Friday.)

Compare that to four weeks ago, when a mere 17 of 57 companies listed in the IPODEX were trading above their first-day close. That's as good an indication as any that Internet stocks have rebounded strongly from the slump that gripped the sector this spring.

Some Internet shares are moving at more than twice their debut closing price. Below is a list of the highest flyers among the newest crop of stocks, along with their IPO date (you can find full details in IPODEX):

  • F5 Networks (June 4) - 241%
  • Mail.com (June 18) - 186%
  • Stamps.com (June 25) - 148%
  • High Speed Access (June 4) - 134%
  • Digital Island (June 29) - 121%
  • GoTo.com (June 18) - 119%
  • Wit Capital (June 4) - 117%
  • StarMedia Network (May 26) - 100%
  • Proxicom (April 20) 97%
  • Software.com (June 24) - 91%

The star here is F5 Networks, a Seattle-based vendor of server load balancing software. Two things are contributing to its recent soaring performance: 1) The market's love-fest with networking-related stocks, and 2) The company's shares had plenty of room to move up.

F5 Networks priced at $10 a share, and closed its first day of trading at $14.88. That's a 49% increase, which is close to the average first-day performance for all June Internet IPOs. Juniper Networks, in contrast, had one of the best debuts of the year, closing on June 25 at $97.88, a 188% gain over the $34 offer price. As of Friday the company was up to $132.75, an increase of 36% over the 6/25 close.

And while F5 Networks shares have been climbing in recent day, Juniper has been coming down from its high of $162 per share on June 30. Juniper got all the press attention, but as of Friday F5 Networks has a more successful stock - shares are trading at more than five times the offer price, while Juniper's are trading at almost four times their offer price.

(F5 shares continued to climb Monday, opening at $55, while Juniper has fallen below $130.)

The lesson here is that while a hot IPO debut catches attention and can make some quick money for stock flippers, there are some success storiesunfolding beyond the first-day headlines.

Introducing Internet StockTracker, the new weekly e-mail newsletter from internet.com LLC. Every Friday internet.com will deliver to your e-mail in-box the latest performance data on individual Internet companies and their competitors. Internet StockTracker will deliver to you all the statistics you need to assess the week's activity. Subscribe today and receive the Charter Rate of $157 -- a savings of $100 off the regular subscription price! e-newsletters