eChapman: Do We Need Another Portal?
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For an IPO to do well it takes more than a good business plan. Kind of simple, huh? Well, this is not always the case with some IPOs. One example is eChapman.com.
eChapman has set its price range at $12-14 and they are underwriting their own IPO (under The Chapman Co.). The proposed ticker symbol is ECMN.
First of all, always be wary of a company that underwrites its own IPO. Definitely it is not the core competency of a company to do so. Rather, it makes much more sense to hire a quality team. For example, a Wall Street firm will help create an investor base, as well as provide ongoing research. This helps to move the stock price.
Actually, companies that self-underwrite their offering typically do so because underwriters do not want to handle the IPO. It is a big red flag.
True, the financial services marketplace is huge. Jupiter Communications estimates that assets under management in online trading accounts will increase sevenfold from $415 billion at the end of 1998 to more than $3 trillion by 2003. But you can be sure that the competition for those dollars is intense. eChapman is going up against large investment banks such as Ameritrade, DLJdirect, eSchwab, E*Trade and Wit Capital.
Besides, the major portals have been allocating substantial resources in globalizing their offerings. Whats more, these companies - such as Yahoo!, Lycos, Excite - have been doing this for several years.
In other words, do we need another portal? I think not. And investors will likely think the same.