Value Found Close To The Ground
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Maybe investors should start wearing shades. Once again an Internet company has lit up the Wall Street landscape with a stratospheric IPO.
The rocket's red glare in this case comes from "name your price" reverse-auction Web site proprietor priceline.com, whose stock opened Tuesday at $81a share - more than five times its $16 offer price -- before closing at $69.
Priceline.com's is just the latest spectacular debut in a wild quarter for Internet IPOs. Today we'll look at the most significant of the 26 Internet IPOs launched so far this year and how some of them are performing now.
In terms of both total dollars raised by Internet IPOs and their opening price, Q1 has been unprecedented. Priceline.com raised $160 million with its share offering, dwarfing amounts raised by Internet stock legends such as Amazon.com ($54 million in May 1997), eBay ($63 million last September) and Yahoo! ($33.8 million in March '96).
Here are the biggest money makers among Internet IPOs in Q1 alone:
- OneMain.com -- $187 million
- Priceline.com -- $160 million
- Covad Communications -- $140 million
- Prodigy -- $120 million
- Critical Path -- $108 million
- Autobytel.com -- 103.5 million
Now let's look at opening price, another area where previous standards are being rendered meaningless. Here are the Internet companies whose IPOs have opened highest so far in 1999:
- IVillage (March 19) -- $95.88
- MarketWatch (Jan. 15) -- $90
- Pacific Internet (Feb. 5) -- $88
- Modem Media (Feb. 5) -- $55.63
- PcOrder.com (Feb. 26) -- $55.25
- Autobytel.com (March 26) -- $52.75
- MiningCo.com (March 24) -- $52
Kicking yourself for not getting in early on these hot Internet stocks? Relax. The runner who sprints to an early lead in a marathon often has trouble keeping up the pace. Sure, iVillage and MiningCo.com are still above those first-day numbers (opening today at $99.75 and $75.25, respectively), but they've just entered the fray. And pcOrder.com, another relative newcomer, opened today at $58, slightly above its debut trading price.
Meanwhile, the three oldest IPOs listed above have lost altitude. MarketWatch, for example, opened today at $73.13, nearly 19% below its Jan. 15 open, and 25% below its first-day close of $97.50. Also today, Pacific Internet opened at $48 (45% below its open), Modem Media opened at $43 (down 23%) and Autobytel.com was at $39.50 (25% down). All this in what has been a red-hot Internet stocks market.
Let's flip it around now and look at the Internet IPOs with the lowest opening trade prices this year. They are:
- Digital Lava (Feb. 17) -- $6.75
- Prodigy (Feb. 11) -- $20
- NEON Systems (March 5) -- $21.25
- Intraware (Feb. 26) -- $21.31
- AutoWeb.com (March 23) -- $21.63
- Healtheon (Feb. 11) -- $21.88
Rather modest openings, especially since apparently we've entered the era of the $20-plus offer price. However, as of today, every one of these bottom-feeders offer better value to early investors than the rocket ships, based on the first-day opening price.
Autoweb.com, for example, opened today at $33.94, 57% above its first-day price (though below its $40 first-day close). Here's how the others opened today and how it compares to their IPO open:
- Digital Lava -- $11.94 (up 77%)
- Prodigy -- $39.50 (up 97.5%)
- NEON Systems -- $51.81 (up 144%)
- Intraware -- $41.13 (up 93%)
- Healtheon -- $45.63 (up 109%)
Obviously all these figures represent a snapshot in time, and things can change dramatically. But as of today, the companies that made the most unassuming ticker debuts so far this year are outshining the Internet stocks that blazed across the sky.