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1999 Internet IPOs Up 179 Percent

Investors gripe that they can't buy an Internet IPO. Which is effectively true. Even the paltry shares the e-brokers offer is a token tossed to the retail investor. But if individual investors had bought each one of the six Internet public offerings at the lows (meaning the stock was trading already) they'd be up 112%.

Overall, the six IPOs this year gained 179% from initial price and flirted with gains of 338% at their collective highs. Internet companies sold an average of about 4 million shares at $15.50 per share. The group raised more than $360 million proceeds or an average of about $60 million.

Notable is that our analysis indicated in 1995 and 1996 that the gross proceeds of an average Internet IPO was about $35 million to $40 million. Now the game is that much more expensive.

Let's look at the 1999 list:


Company Stock Shares IPO share 11-Feb Change from Share Change from Share Change from
name Symbol sold price close IPO high IPO Low IPO
MarketWatch MKTW 2.75 $ 17.00 $ 72.00 324% $ 130.00 665% $ 60.00 253%
Healtheon HLTH 5.00 $ 8.00 $ 31.38 292% $ 33.25 316% $ 21.75 172%
Verticalnet VERT 3.50 $ 16.00 $ 45.38 184% $ 55.44 246% $ 35.06 119%
Allaire ALLR 2.50 $ 20.00 $ 47.75 139% $ 69.00 245% $ 34.00 70%
Pacific Internet PCNTF 3.00 $ 17.00 $ 35.00 106% $ 88.00 418% $ 26.25 54%
Prodigy PRGY 8.00 $ 15.00 $ 28.13 88% $ 32.00 113% $ 20.00 33%
  TOTAL 24.75 93.00 259.63 179% 407.69 338% 197.06 112%
  AVERAGE 4.13 15.50 43.27 179% 67.95 338% 32.84 112%

Biggest winner so far this year was MarketWatch.com (NASDAQ:MKTW), the financial news provider.

MarketWatch has a great editorial product and dozens of staff focused on providing near real-time news. It shows. Amazing what a little investment in people can do.

Healtheon (NASDAQ:HLTH), meanwhile, jumped out of the gate and climbed 292% from IPO price. The Internet-based healthcare industry networking provider smartly kept its per share price affordable for the indy investor, allowing them to snap up shares in the aftermarket, although it sold 5 million shares. We think Healtheon has a chance to revolutionize healthcare but that the road is a hard one given the dysfunctional healthcare system.

VerticalNet's (NASDAQ:VERT) story relies on its 33 "trade communities" (verticals) with such nuts and bolts names as pulpandpaperonline.com or meatandpoultryonline.com. It posted $2.3 million pro forma revenue in 1998, up 323% vs. 1997. Thes etrade communities target the ebusiness sector at providing them info and commerce opportunities.

Allaire (NASDAQ:ALLR) is best known for its Cold Fusion software that allows people to create fairly complex Web sites with fancy features with little pain involved. ALLR's revenue for the fourth quarter of 1998 was $6.6 million, up 116% vs. 4Q97. Net loss for the fourth quarter of 1998 was $2.8 million vs. $2.9 million 4Q97. Total 1998 revenue hit $20.5 million, up 168% vs. 1997. Net loss for the year reached $10.8 million vs. net loss of $7.4 million for 1997.

Pacific Internet (NASDAQ:PCNTF) was one of the higher flyers its first day public up 418% from IPO price to $88 before settling down. This issue was more than 30x oversubscribed as investors wanted in on an ISP with an Asia focus. Singapore's huge conglomerate SembCorp owns a majority of PCNTF after spinning out part to the public.

Prodigy (NASDAQ:PRGY), not your father's online service but the ISP, sold the most shares of the IPOs in the table, 8 million shares at $15, raising $120 million. The amount underscores the large amounts of capital that ISPs in the U.S. must raise to compete. Mexican telecommunications powerhouse Carso Global Telecom owns a majority of PRGY.

For analysis about other Internet IPOs that have gone public, as well as some to come please click here

HotWatch '99 - the hottest analysis about Internet stocks delivered to your email box each month! Last year's 10 to watch from Steve Harmon was up 300%. Will 1999 be a repeat? More info click here

Accolades for Internet Stock Report:

"Fresh and provocative" -CBS Marketwatch, who named Steve Harmon one of the top Internet stock analysts and only independent one honored

"I am a huge fan of Steve Harmon's analysis" -Kleiner Perkins' John Doerr