August’s Internet IPO Freeze

I keep reading elsewhere about the stirring comeback of the IPO market.
Either these sources are talking about biotechs or they’re actually testing
new drugs for those companies, because the market for Internet public
offerings is colder than ever.

The numbers tell the story quite vividly. For starters, only a dozen ‘Net
stocks debuted in August, almost exactly the same amount we saw in April,
June and July.

But the most telling figure is the average first-day return: At 14%, August
easily was the worst month for Internet IPOs both this year and last. The
distant runner-up is last April’s 31% average first-day gain.

Four of the 12 Internet stocks launched in August finished below water on
their respective first days of trading, and all four managed to crack the
list of 10 worst ‘Net debuts this year.

Leading this ignominious group is iAsiaWorks , a
California-based access provider for companies operating in the Asian and
Pacific markets. With a drop of 27% on Aug. 3, IAWK now tops this year’s
list of first-day losers. Things haven’t gotten much better in ensuing
weeks. iAsiaWorks shares closed Wednesday at $10.06, or 23% below the $13
offer price.

Two other ‘Net tickers (see chart below) broke even in their initial trading
sessions, while only one – Evolve
Software
– had what could be defined as a moonshot,
as it doubled in price on its first day on the Nasdaq, closing at $18.
(Shares finished Wednesday at $19.38.)

Even America Online’s
much-hyped international entry, America Online Latin America , barely gained in its Aug. 8 debut, finishing up 44 cents, or
6%. Since then, shares haven’t strayed far from the $8 offer price. Hola,
AOLA!

Will the Internet IPO market heat up as the weather turns colder? Well, it
can’t get any worse than August, but that doesn’t mean it will get much
better. Sure, there’s a backlog of ‘Net companies waiting to go public, but
a glut of offerings will only ensure a greater number of fair-to-middling
openers, because Internet investors likely won’t get sucked into more IPO
madness anytime soon. They flew too close to the sun once already, and the
descent – to quote 17th-century political philosopher Thomas Hobbes – was
nasty, brutish and short. Hobbes must have been a day trader.

Month This year 1999
January 5 4
February 27 11
March 27 13
April 13 17
May 6 26
June 11 32
July 13 35
August 12 26
Total 114 164

Average First-Day Return (By Month)

Month This Year 1999
January 160% 241%
February 126% 122%
March 99% 134%
April 31% 116%
May 38% 59%
June 41% 116%
July 63% 74%
August 14% 45%

10 Best Internet Debuts of 2000

Company IPO Date Gain
webMethods Feb. 11 508%
Crayfish March 8 414%
Selectica March 10 371%
FirePond Feb. 4 356%
Neoforma.com Jan. 24 303%
Extensity Jan. 27 256%
ArrowPoint March 31 248%
Storage Networks June 30 234%
GigaMedia Feb. 17 226%
net.Genesis Feb. 29 216%

10 Worst Internet Debuts of 2000

Company IPO
Date
Gain/Loss
iAsiaWorks Aug. 3 -27%
INTERLAND July 25 -26%
ARTISTdirect March 28 -22%
Avistar Communications Aug. 17 -22%
AsiaContent.com April 12 -21%
coolsavings.com May 19 -21%
ScreamingMedia Aug. 3 -13%
PartsBase.com March 22 -12%
ImproveNet March 16 -12%
RadView Software Aug. 9 -10%

Here are August’s Internet IPOs, listed by date, with their first-day
performances:

  • Aug. 1 – Convergent Group(CVGP),
    0%

  • Aug. 3 – ScreamingMedia(SCRM),
    -13%

  • Aug. 3 – Resonate(RSNT),
    72%

  • Aug. 3 – iAsiaWorks(IAWK)
    , -27%

  • Aug. 4 – Giganet(GGNT)
    , 32%

  • Aug. 8 – MIND C.T.I.(MNDO)
    , 0%

  • Aug. 8 – America Online Latin America(AOLA)
    , 6%

  • Aug. 9 – RadView Software(RDVW)
    , -10%

  • Aug. 10 – Evolve Software(EVLV)
    , 100%

  • Aug. 11 – Equinix(EQIX)
    , 9%

  • Aug. 17 – Avistar Communications(AVSR)
    , -22%

  • Aug. 25 – ServiceWare Technologies(SVCW)
    , 25%

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