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Internet IPOs, Too Many Offers May Spoil The Party

The old classic rock song "And The Beat Goes On" could be the theme song for the current parade of IPOs down Wall Street with this group of eight new offers this year up 166% from offering price, up 320% at the peak, up 32% from lows.

The other side to the tale is those who bought at the peak. Taken together the group is down 37% from the highs. The after-market performance looks strong and it's encouraging an onslaught of companies to go public.

I've seen this before many times, the glut of offerings. What I think may happen: brand-name IPOs such as Marimba, theStreet.com, iVillage, eToys, and perhaps Priceline.com may steal the thunder from the market. If so, that could leave a similar situation as what happened last July-August when the oversupply created a glut then and several IPOs were withdrawn.

Let's see IPODEX (Internet IPO Index) and check the stats:

Company Stock Shares IPO share 04-Mar-99 Change from Share
name symbol sold price close IPO high
MarketWatch MKTW 2.75 $ 17.00 $ 62.25 266% $ 130.00
Verticalnet VERT 3.50 $ 16.00 $ 54.75 242% $ 59.88
Healtheon HLTH 5.00 $ 8.00 $ 27.00 238% $ 35.06
WebTrends WEBT 3.50 $ 13.00 $ 30.94 138% $ 38.00
Allaire ALLR 2.50 $ 20.00 $ 47.38 137% $ 69.00
Prodigy PRGY 8.00 $ 15.00 $ 35.28 135% $ 50.63
Vignette VIGN 4.00 $ 19.00 $ 44.44 134% $ 54.63
Pacific Internet PCNTF 3.00 $ 17.00 $ 30.88 82% $ 88.00
  TOTAL 32.25 $ 125.00 $ 332.91 166% $ 525.19
  AVERAGE 4.03 $ 15.63 $ 41.61 166% $ 65.65
  MEDIAN 3.50 $ 16.50 $ 39.86 142% $ 57.25

Healtheon (NASDAQ:HLTH) and Prodigy (NASDAQ:PRGY) are two high-profile examples that didn't IPO last year when they first wanted to. The stock market softened and they walked away empty-handed that time around. Notably, both stepped up to the plate and had successful liquidity events in 1999.

While we're at it, note the percentage change in those two since going public. HLTH has run 238% from IPO pricing, as high as 338% from IPO and still enjoyed through March 4 a 229% premium vs. its low to date. Noting the low is important because anyone could have bought HLTH at the low. If bought at the high, however, which everyone could do also, you'd be down 23%.

Company Stock 04-Mar-99 High % Share 04-Mar-99 Low %
name symbol % of high vs. IPO low % difference/low vs. IPO
MarketWatch MKTW -52% 665% $ 56.00 11% 229%
Verticalnet VERT -9% 274% $ 34.75 58% 117%
Healtheon HLTH -23% 338% $ 21.75 24% 172%
WebTrends WEBT -19% 192% $ 22.00 41% 69%
Allaire ALLR -31% 245% $ 34.00 39% 70%
Prodigy PRGY -30% 238% $ 20.00 76% 33%
Vignette VIGN -19% 188% $ 37.25 19% 96%
Pacific Internet PCNTF -65% 418% $ 26.25 18% 54%
  TOTAL -37% 320% $ 252.00 32% 102%
  AVERAGE -37% 320% $ 31.50 32% 102%
  MEDIAN -30% 247% $ 30.13 32% 83%

PRGY, meanwhile, stacks up like this: percent vs. IPO, up 135%; high vs. IPO, 238%; from low, 76%. But if bought at the high you're down 30%.

Across all the offers, most increased either the IPO share price above range and/or boosted shares offered. The median IPO was priced at $16.50 with 3.5 million shares sold. This group raised nearly $500 million in gross proceeds or a median $50 million per debut.