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Seven Days in Tibet? Top 10 Web Sites Up 17% in a Week

In the mountain climbing world there's a group of people who do nothing but climb as many peaks as they can in a term they dub "bagging peaks" or reaching the summit. On Wall Street there's a similar group wandering in the frosty ether space who thought they saw the summit but now have been left "holding the bag" as top 10 Web site gain 17% in value since June 24.

The group is known as "shortsellers" who borrow stock from a broker and sell it in the expectation that those shares will drop. They make a profit by buying shares at a lower price within a certain time frame and pocketing the difference. If the stock keeps rising, fueled by this "shortseller squeeze," then they lose money. With Internet stocks they've lost tons.

About half the float of more well-known Web firms including Yahoo!, Amazon, CNET and Excite are sold short according to the latest stats from NASDAQ. When that happens, and there's little float (shares in circulation) to cover those sales, the demand for shares pushes up price. Result? Look at the market capitalizations for the top public firms in our handy table:

WEBDEX June 24 - July 1

Mecklermedia's

Unique

June 24

July 1

June 24

July 1

Percent

WEBDEX

Users

Market cap^ or PMV*

Market cap or PMV*

User

User

change

website value index

(millions)

(millions)

(millions)

Value

Value

Yahoo

31.4

$6,885

$7,863

$220

$251

14.2%

AOL.com*

22.9

$2,500

$2,750

$109

$120

10.0%

Excite

19.4

$1,993

$2,481

$103

$128

24.5%

Netscape.com*

18.9

$1,600

$2,000

$85

$106

25.0%

Microsoft.com*

17.4

$2,000

$2,250

$115

$129

12.5%

MSN.com/Hotmail

14.8

$1,250

$1,400

$85

$95

12.0%

GeoCities*

14.0

$500

$575

$36

$41

15.0%

Lycos

13.7

$1,253

$1,520

$91

$111

21.3%

Infoseek

13.3

$1,049

$1,184

$79

$89

12.9%

Disney.com*

8.5

$1,000

$1,250

$118

$148

25.0%

TOTAL

174.1

$20,030

$23,273

$1,040

$1,218

17.1%

AVERAGE

17.4

$2,003

$2,327

$104

$122

17.1%

(c) 1998 Mecklermedia, The Internet Media Company. ^ = primary shares market cap * PMV = private market value or asset value of Web site for public firms with multiple divisions

As shares climb higher more traders jump in and sell the stock short in an upward spiral that leaves them on the top of Mount Everest in nothing but shorts. If the support ever falls or loud noises occur on the slope then avalanches can happen and stocks drop. Will it happen with this group?

We suspect that mergermania and alliance fever could be the reason the top 10 sites once again go higher. Looking at the Disney.com-Infoseek combined value we show the two at $2.4 billion, which could favor Infoseek (NASDAQ:SEEK) shares since Disney combined its Web unit with the search firm.

The biggest wild card looks like GeoCities which has filed to go public but cannot be valued as a "public" valuation unless the company wants to IPO at $35 a share. Said another way, the private market is not paying the premiums Wall Street has been paying lately for top Web sites.

Once it begins trading, a $1 billion GeoCities wouldn't surprise us. The question will be how long can it sustain that and can it turn its freebie swap meet into a commercial enterprise. Probably.

Netscape (NASDAQ:NSCP) made headlines with its media alliance talk, which some took as a "for sale" sign on the hybrid software/Web portal company. On June 30 Netscape launched an updated Netcenter that caused investors to push shares up past $30 for the first time in a great while.

We estimate Netcenter could be a $2 billion property. That leaves $1.5 billion for everything else Netscape does in software and "Mozilla Rules" T-shirt sales.

Microsoft's combined main Web sites plus Hotmail/MSN tallies up to more than $3 billion with combined users that would actually place it number one on the Web or very close to it. User data comes from Relevant Knowledge, one of the better survey outfits, so it's their call. We crunch the numbers on everything else.

There's controversy surrounding DoubleClick (NASDAQ:DCLK) which said Media Metrix data suggests it is number three in Web reach. Reach differs from "unique users," but the concept is similar. Rival LinkExchange said this isn't true. DCLK went from $40 to a new high of $71.50 per share on the news.

Q&A of the Day:

"Should DoubleClick & LinkExchange be counted in the same space as portals and community?" Click here now and send us your yes, no, maybe, or why not?



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