RealTime IT News

iTurf Wakes Up

It's been almost invisible since going public last April, but keep an eye on "Gen Y" Web network iTurf (TURF), whose stock price doubled Monday after nearly six months of bottom-feeding.

After closing at 13 3/4 last Friday, TURF soared to 20 5/8 on Monday, a clean 50% gain. Like virtually every other Internet stock, however, iTurf was down as of Tuesday afternoon, trading at 17 15/16.

Even that lower figure is no doubt welcome by iTurf investors. After an impressive debut on April 9, when it closed at 57 7/16, TURF sank fast. Since late May it has spent the vast majority of its time trading in the $10 to $15 per share range, well below its $22 offer price and not much above its low price of 9 7/16.

A number of factors could be behind iTurf's sudden rejuvenation. First and foremost, the word from insiders is that the company's Q3 earnings, scheduled to be reported on Nov. 30, will bring positive news. Adding to the optimism was the quarterly report released last Thursday by iTurf rival Alloy Online (ALOY)Alloy Online, which more than doubled revenue in the quarter ended Sept. 30.

In addition, I've heard street rumors that bricks-and-mortar retailer The Gap may be looking to purchase iTurf.

Given eventual plans by iTurf's parent company, "Gen Y" direct marketer dELiA*s, to spin off iTurf as a separate entity (an S-1 for the sale of 2 million shares was filed on Nov. 5), The Gap's interest sounds plausible on two counts: 1) Both companies are targeting the same 10- to 24-year-old demographic, and 2) The already low survival rate for independent sites fighting for e-commerce dollars will fall even further as large retailers with brand and marketing clout continue their migration to the Net. Thus, there is pressure on companies like iTurf to partner or perish.

Meanwhile, iTurf prepares to debut its flagship site, iTurf.com, which is designed to be a gateway to other sites in the iTurf network, such as gURL.com, OnTap.com, dELiAs.com, droog.com, discountdomain.com and tsisoccer.com.

These sites offer community-related services to teens and college students, but that's just the eyeball draw. ITurf makes about 85% of its revenue through e-commerce.

With $5.6 million through the first two quarters of the year, iTurf could be on track for a $15 million year in sales. With a market cap of $311 million at the 17 15/16 price, the company is trading around 21x projected '99 revenue.

It will be interesting to see whether next week's earnings report can prevent iTurf from returning to its hibernation.

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