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RealTime IT News

IPO Aftermarket Have-Nots

The Internet IPO market is hotter than it's been since last April, as numbers from the latest IPODEX and September public offerings show.

More than 70 percent of the stocks listed in the current IPODEX - 32 out of 45 - have gained in value from their respective closing prices in September and October.

But 13 new Internet stocks have been left out of this fall's market run-up. Here are the five biggest losers listed through the IPODEX as of Friday's close:

IWIN Webstakes.com Sept. 24 -39%
GDEN Garden.com Sept. 16 -34%
MSCP Medscape Sept. 24 -33%
NZRO NetZero Sept. 24 -30%
PLRX PlanetRx.com Oct. 7 -29%

It's been straight downhill since its Sept. 24 IPO for Internet direct marketing company Webstakes.com. Shares of IWIN opened trading at 13 >, below the offer price of $14, and finished the day at $11.50.

Then things got worse. IWIN shares fell for a week after the Oct. 21 release of Q3 earnings showing $3 million in revenue (a 144 percent increase over the year-ago quarter) and a net loss of $6 million, or 42 cents per share, compared to the Q3 '98 net loss of $564,000, or 4 cents per share.

The stock hit bottom at 5 15/16 on Oct. 26 (that's 58% below the offer price), before rallying in recent days. IWIN was trading at 8 1/8 on Tuesday afternoon, or 29 percent below the first-day close.

Unlike Webstakes.com, whose stock spent about five seconds trading above its offer price, Garden.com had a decent opening day, with GDEN shares finishing trading on Sept. 16 at 19 1/16, or 59 percent above the $12 offer amount.

But like Webstakes.com, the online gardening site saw its stock fall for several days after releasing Q1 earnings last Tuesday which showed strong revenue growth (nearly 300 percent) but low revenue ($1.4 million.)

As of Tuesday afternoon, however, GDEN has gained back much ground. Closing Monday at 12 1/16, GDEN was trading Tuesday at 14 5/16, a one-day rise of nearly 19 percent.

In some ways the most humbling performance of the recent Internet IPOs belongs to free ISP player NetZero. Many investors bought into the premise that free Internet access is the wave of the future and would force America Online to either ditch its subscription fees or die.

NetZero rode the giant-killer hype to an 82 percent first-day gain, as NZRO shares finished at 29 1/8 after being offered at $16. The stock plunged from there, climbed over $30 per share on Oct. 11, and then plunged again.

Another brief rally was killed by the release of Q1 earnings on Oct. 25, which showed a loss of $14.9 million, or $1.04 per share, nearly double the $8.2 million, or 72 cents per share, loss from last year's first quarter.

Trading Tuesday afternoon at 20 5/8, NZRO has fallen 16 percent since releasing quarterly results.


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