Investors Appear to Love Internet IPOs Again
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Wall Street's love-hate relationship with Internet IPOs turned rosy again Wednesday, helping Web publisher Earthweb Inc. make a stunning debut.
EarthWeb's soared from its $14 opening to as high as $59 today before closing at $48.6875. EarthWeb's volume was 11.4 million shares, meaning the company's entire float of 2.1 million shares changed hands more than five times.
At that level of market capitalization, EarthWeb is trading at about 154 times annualized revenue. For the nine months ending Sept. 30, it had $1.9 million revenue.
What's driving this one? Demand for the stock was strong we think based on three things: 1) Internet stocks as measured by ISDEX, The Internet Stock Index, are up more than 65 percent the past month and 2) Underwriter JP Morgan did the leg work to sell the deal to its institutional clients, going twice as long to ensure the deal got bought 3) There hasn't been an Internet IPO for about two months so demand was pent up for a new offering.
Look for our follow up analysis on Earthweb in the Internet Stock Report.