RealTime IT News

Up 19.9% In Week: ISDEX Rides Strong Etail Interest

While "The Waterboy" is number one at the box office this week, playing just up the block on Wall Street is an altogether rather liquid event, ISDEX, up 19.9% in one week.

Yes, one week.

Fans of mountain climbing know that sometimes you don't know how far you've climbed until you look back. Looking back since November 3 ISDEX, The Internet Stock Index, shows the most-watched Internet index up 19.9%.

Said another way, in one week Internet stocks have done better than NASDAQ and Dow Jones Industrials have all year.

We're willing to write off some of it as 'delusional exuberance,' a preponderance of fluoride in the drinking water, alien abductions, or Newt Gingrich resigning. But we cannot justify seeing clear to an eBay (NASDAQ:EBAY) north of 70x our estimated revenue for it next year. 70x. Let's see the numbers.

Here's the part most people don't know -- fully-diluted shares basis EBAY market cap is $7 billion, or $1.8 billion you don't see on first checking its market cap, which is based on primary shares outstanding.

That $1.8 billion floating invisibly off Wall Street's radar is like owning a CDnow-type firm 9 times over outright (with a market cap of about $200 million), or owning Onsale.com (NASDAQ:ONSL) 4.6 times over (market cap is $389 million). And this is just EBAY's option/warrant pool converted to share value.

The buy ratings and per share targets on EBAY we believe have set it up for a rocketship ride that it better fuel with outstanding revenue and earnings to sustain. If not, we all know what happens to rockets with no fuel. Don't get us wrong, we love eBay's etail model. Its traders, shortsellers and the herd bidding on its shares we believe may be ahead of themselves.

Even with its rise, EBAY shares didn't lead the buying spree. Etail stocks came out on top in percent gains, as investors "rediscovered" sellers of software, PCs, and music outside the usual brand-name circle we've seen with the more well-known stocks. Take a look at the list, ISDEX November 3 - 10. What a week:

ISDEX ®   10-Nov-98 % change Point change
The Internet Stock Index   close from from
www.isdex.com     03-Nov-98 03-Nov-98
ISDEX   205.26 19.9% 34.02
NASDAQ   1,865.62 4.3% 77.19
DJIA   8,863.98 1.8% 157.83
Egghead.com EGGS $13.88 68% $5.63
N2K NTKI $9.31 60% $3.50
Inktomi* INKT $130.13 56% $46.81
eBay* EBAY $130.88 56% $46.88
Mindspring MSPG $57.38 48% $18.50
CDnow CDNW $12.00 45% $3.75
Beyond.com BYND $15.75 43% $4.75
Excite XCIT $51.63 35% $13.50
CMG Info CMGI $79.25 32% $19.25
Lycos LCOS $54.38 31% $12.88
RealNetworks RNWK $47.75 29% $10.75
Onsale ONSL $20.56 29% $4.56
CKS Group CKSG $28.13 28% $6.13
CNET CNWK $49.38 25% $9.75
Yahoo! YHOO $176.56 24% $34.44
PSINet PSIX $18.31 24% $3.56
GeoCities* GCTY $42.38 24% $8.13
Infoseek SEEK $36.38 23% $6.75
USWeb USWB $20.25 22% $3.63
E*TRADE EGRP $22.75 21% $3.88
Netscape NSCP $28.13 19% $4.50
IDT Corp IDTC $20.63 19% $3.25
Verio* VRIO $16.88 18% $2.63
Broadcom* BRCM $96.50 18% $14.69
Verisign* VRSN $36.50 18% $5.50
VocalTec VOCLF $10.00 16% $1.38
Earthlink Network ELNK $50.06 16% $6.81
CheckPoint Software CHKPF $27.38 15% $3.63
Security Dynamics SDTI $13.00 13% $1.50
Concentric CNCX $28.00 13% $3.13
ISS Group* ISSX $35.25 12% $3.81
@Home Network ATHM $48.13 12% $5.13
Spyglass SPYG $16.44 11% $1.56
Broadcast.com* BCST $55.25 11% $5.25
America Online AOL $144.50 9% $12.00
Open Market OMKT $8.56 9% $0.69
Exodus* EXDS $34.63 7% $2.19
Doubleclick DCLK $36.69 7% $2.31
Network Associates NETA $46.56 6% $2.63
Cisco CSCO $67.00 6% $3.63
Sportsline USA SPLN $16.38 6% $0.88
Amazon.Com AMZN $131.75 5% $5.69
CyberCash CYCH $8.81 4% $0.34
Axent AXNT $24.63 4% $0.88
Network Solutions NSOL $67.25 4% $2.38
Open Text OTEXF $13.88 3% $0.38
Mecklermedia MECK $28.63 1% $0.19
24/7 Media* TFSM $17.00 -2% -$0.38
Security First Technologies SONE $17.13 -5% -$0.88
Broadvision BVSN $15.38 -12% -$2.13
* change from IPO 1998        

News behind the moves:

  • 98.11.04--AOL (NYSE:AOL) takes a step closer to Netscape (NASDAQ:NSCP) with its Digital Cities on Netcenter by providing Netcenter Digital Cities' local content.

  • 98.11.05--CMGI (NASDAQ:CMGI) invests in startup Virtual Ink, which allows people to share workflow over the Internet. No terms disclosed. Another portfolio investment in CMGI's long list that the firm leverages with each other and with clients looking for services.

  • 98.11.06--Barnes & Noble (NYSE:BKS), the sleepy giant book retail leader, announces a $600 million deal to acquire Ingram Book Group. Terms: $400 million stock, $200 million cash. We think Barnes, which lags Amazon.com (NASDAQ:AMZN) on the Internet bookselling front, showed a masterful move to acquire the food chain. Amazon relies on Ingram as one of its main book wholesale suppliers.

    The buy will give Barnes the leading retail and wholesale place in the book selling industry, helping to increase the speed of deliveries for books sold via barnesannoble.com. We also think that even with the buy that Ingram will continue to support one of its biggest customers, Amazon. Once the Ingram deal completes, Amazon will be paying Barnes for books--what a twisted tale.

  • 98.11.09--Excite (NASDAQ:XCIT) adds a holiday shopping area with faster ordering, buying and shipping designed to make the experience easier. The area features more than two dozen retailers. Something we've found astonishing is the real lack of efficient and easy-to-use shopping sites on the Web. This seems like a good move by Excite; logical move, but good move nonetheless. Overdue in fact.

  • 98.11.09--PSINet (NASDAQ:PSIX) selects Inktomi (NASDAQ:INKT) for its cache network software that effectively speeds up network data flow by storing popular files closer to the user. Inktomi has licensed or works with a variety of Internet firms including America Online, CNET, Intel, Microsoft, RealNetworks, Sun Microsystems, and Yahoo!

  • 98.11.10--ISDEX hits an all-time high, breaking 200 points for the first time ever. We attribute this to strong reports from many analysts (ourselves included) about holiday sales expectations driving etail stocks.

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