Despite this year’s Internet IPO slump, Dot.Com public offerings continue earning their reputation for instant escape velocity — at least on the first day.
Indeed, a survey by Hoover’s Online Reports indicates that the ten largest IPO first-day gains in stock market history were made by Internet and networking companies and all of those happened in the last 12 months (as defined by the survey’s Nov. 13 cutoff date).
VC Watch took the Hoover’s survey one step further and after digging through quotes at our sister site Wall Street Research Network, found that while most of the big winners are still accelerating toward deep space, a couple have ballistic trajectories more like the Space Shuttle Challenger than Apollo 11.
All of this is important to VC watchers because IPOs are critical to the life of venture capitalists and the entrepreneurs they fund. Theirs is a marriage of convenience and is rarely long-term. Before a term sheet is even offered to the fledging company, VCs have their eye on the exit: the IPO or acquisition that brings the hoped-for gains flooding into their bank accounts.
What’s clear by looking at our extensions to the Hoover’s survey (see chart) is that the stock market’s all-time first-day IPO winner — theglobe.com — is a loser for long-term investors. Even holders of friends and family stock are out of luck because the Wednesday’s closing price of $10.63 is only 118% higher than the $9 offering price — this at a time when money invested in a Nasdaq composite index fund would have climbed 179%.
But what is truly amazing is that except for three stocks (theglobe.com, Cobalt Networks and CBS MarketWatch.com) even people who bought the stock at the first day’s closing high price have made out very sell indeed with Ask Jeeves holders faring best of all with a 263% increase over the opening day high and a 1,221% gain over the offering price (despite having closed $15 lower on Wednesday).
|Biggest All-Time First-Day Jumps (as of 11/13/99)|
|first day||first day||Price||% change||% change|
|Rank||Company||Ticker||IPO date||Offer||Close||% gains||11/17/99||from offer||1st day high|
|2||Foundry Networks, Inc.||FDRY||9/28/99||$25||$156.25||525%||$ 181.00||724%||116%||http://www.hoovers.com/co/capsule/6/0,2163,59146,00.html|
|3||Cobalt Networks, Inc.||COBT||11/5/99||$22||$128.13||482%||$ 107.25||488%||84%||http://www.hoovers.com/co/capsule/0/0,2163,59860,00.html|
|4||MarketWatch.com, Inc.||MKTW||1/15/99||$17||$97.50||474%||$ 48.38||285%||50%||http://www.hoovers.com/co/capsule/6/0,2163,58506,00.html|
|5||Akamai Technologies, Inc.||AKAM||10/29/99||$26||$145.19||458%||$ 189.38||728%||130%||http://www.hoovers.com/co/capsule/6/0,2163,59556,00.html|
|6||Sycamore Networks, Inc.||SCMR||10/22/99||$38||$184.75||386%||$ 261.13||687%||141%||http://www.hoovers.com/co/capsule/9/0,2163,60499,00.html|
|7||Ask Jeeves, Inc.||ASKJ||7/1/99||$14||$64.94||364%||$ 171.00||1221%||263%||http://www.hoovers.com/co/capsule/2/0,2163,59572,00.html|
|8||Finisar Corporation||FNSR||11/12/99||$19||$86.88||357%||$ 97.50||513%||112%||http://www.hoovers.com/co/capsule/3/0,2163,60233,00.html|
|9||Crossroads Systems, Inc.||CRDS||10/20/99||$18||$78.72||337%||$ 79.88||444%||101%||http://www.hoovers.com/co/capsule/2/0,2163,60972,00.html|
|10||priceline.com Incorporated||PCLN||4/30/99||$16||$69.00||331%||$ 76.88||481%||111%|
|Avg. Gain||Avg. Gain||Avg. Gain|
|SOURCE: Hoover’s Online, WSRN||432%||569%||113%|
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