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.
Earthweb produces Web sites aimed at the Internet developer industry with
its perhaps better known site Gamelan, the official Java directory site
sanctioned by Sun Microsystems.
Look for our follow up analysis on Earthweb in the Internet Stock Report.
