April’s Altitude Adjustment

Last month’s record number of Internet IPOs demonstrates that interest
in new cyber stocks remain at an all-time high.

But while the 17 Internet IPOs released in April easily eclipsed the
previous record of 13 set just one month before – how’s that for
momentum? – the average percentage gain in the first-day closing price
over the offer price for Internet IPOs in April was 116%, the lowest
amount this year.

Compare that to the averages for January (241%), February (122%) and
March (134%), and it might be reasonable to conclude that the Internet
IPO market began to reach a saturation point in April.

However, a closer look at the numbers indicates that the two Internet
stock market corrections in mid-month may have had more to do with
April’s relative first-day shortfall than did any surplus of new
Internet stock plays.

The 12 Internet IPOs released after the first market correction on April
14 had an average first-day close of 98% above the offer price. In
contrast, the first-day closing price of the five initial April IPOs
averaged 162% above the offer amount.

Certainly April had its share of moonshots, with three Internet IPOs –
from Log On America, Rhythms NetConnections and Marimba – each ending
their first day of trading at more than 200% above the offer price.

More telling was the high percentage of Internet IPOs that failed to hit
the stratosphere. Seven out of 17 – that’s 41% — failed to reach at
least double the offer price when the closing bell rang on their first
day of trading. And three of April’s IPOs – from Town Pages Net.com,
AppliedTheory and Launch Media – were among the five worst of 1999 in
terms of opening-day performance. All three began trading after April
14.

Below are charts showing this year’s 10 best Internet stock debuts —
measured by first-day closing price as a percentage of offer price – and
a chronological listing of all Internet IPOs and their first-day
performance through April.

10 Best of 1999

  1. CBS MarketWatch.com (Jan. 15) – 474%
  2. priceline.com (March 30) – 331%
  3. Healtheon (Feb. 11) – 292%
  4. Log On America (April 22) – 250%
  5. iVillage (March 19) – 234%
  6. Rhythms NetConnections (April 7) – 229%
  7. Tut Systems (Jan. 29) – 219%
  8. Marimba (April 30) – 203%
  9. Autoweb.com (March 23) – 186%
  10. VerticalNet (Feb. 11) – 184%
  • Internet IPOs Through April

    • Jan. 15 — CBS MarketWatch.com, 474%
    • Jan. 22 – Covad Communications, 151%
    • Jan. 22 – Allaire, 119%
    • Jan. 29 – Tut Systems, 219%
    • Feb. 5 – Pacific Internet, 182%
    • Feb. 5 – Modem Media.Poppe Tyson, 181%
    • Feb. 11 – VerticalNet, 184%
    • Feb. 11 – Prodigy Communications, 88%
    • Feb.11 – Healtheon, 292%
    • Feb. 12 – Bottomline Technologies, 57%
    • Feb. 17 – Digital Lava, -14%
    • Feb. 19 – WebTrends, 108%
    • Feb. 19 – Vignette, 125%
    • Feb. 26 – pcOrder.com, 124%
    • Feb. 26 – Intraware, 18%
    • March 5 – NEON Systems, 67%
    • March 9 – RoweCom, 53%
    • March 16 – FlashNet Communications, 157%
    • March 17 – Multex.com, 140%
    • March 19 – iVillage, 234%
    • March 19 – Cheap Tickets, 108%
    • March 23 – Autoweb.com, 186%
    • March 24 – MiningCo.com, 90%
    • March 25 – OneMain.com, 80%
    • March 26 – autobytel.com, 75%
    • March 29 – Critical Path, 129%
    • March 30 – priceline.com, 331%
    • March 31 – ZDNet Group, 89%
    • April 6 – Claimsnet.com, 106%
    • April 7 – Rhythms NetConnections, 229%
    • April 8 – Value America, 140%
    • April 9 – Usinternetworking, 174%
    • April 9 – iTurf, 161%
    • April 14 – Sagent Technology, 73%
    • April 15 – WorldGate Communications, 62%
    • April 19 – Proxicom, 50%
    • April 20 – Internet Financial Services, 57%
    • April 22 – Log On America, 250%
    • April 23 – Net Perceptions, 113%
    • April 23 – Launch Media, 29%
    • April 27 – Razorfish, 109%
    • April 29 – Mpath Interactive, 181%
    • April 30 – Marimba, 203%
    • April 30 – Town Pages Net.com, 16%
    • April 30 – AppliedTheory, 28%

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