IPO Aftermarket Have-Nots

The Internet IPO market is hotter than it’s been since last April, as
numbers from the latest IPODEX and September
public offerings show.

More than 70 percent of the stocks listed in the current IPODEX – 32 out of 45
– have gained in value from their respective closing prices in September
and October.

But 13 new Internet stocks have been left out of this fall’s market
run-up. Here are the five biggest losers listed through the IPODEX as of
Friday’s close:

It’s been straight downhill since its Sept. 24 IPO for Internet direct
marketing company Webstakes.com. Shares of IWIN opened trading at 13 >,
below the offer price of $14, and finished the day at $11.50.

Then things got worse. IWIN shares fell for a week after the Oct. 21
release of Q3 earnings showing $3 million in revenue (a 144 percent increase
over the year-ago quarter) and a net loss of $6 million, or 42 cents per
share, compared to the Q3 ’98 net loss of $564,000, or 4 cents per
share.

The stock hit bottom at 5 15/16 on Oct. 26 (that’s 58% below the offer
price), before rallying in recent days. IWIN was trading at 8 1/8 on
Tuesday afternoon, or 29 percent below the first-day close.

Unlike Webstakes.com, whose stock spent about five seconds trading above
its offer price, Garden.com had a decent opening day, with GDEN shares
finishing trading on Sept. 16 at 19 1/16, or 59 percent above the $12 offer
amount.

But like Webstakes.com, the online gardening site saw its stock fall for
several days after releasing Q1 earnings last Tuesday which showed
strong revenue growth (nearly 300 percent) but low revenue ($1.4 million.)

As of Tuesday afternoon, however, GDEN has gained back much ground.
Closing Monday at 12 1/16, GDEN was trading Tuesday at 14 5/16, a
one-day rise of nearly 19 percent.

In some ways the most humbling performance of the recent Internet IPOs
belongs to free ISP player NetZero. Many investors bought into the
premise that free Internet access is the wave of the future and would
force America Online to either ditch its subscription fees or die.

NetZero rode the giant-killer hype to an 82 percent first-day gain, as NZRO
shares finished at 29 1/8 after being offered at $16. The stock plunged
from there, climbed over $30 per share on Oct. 11, and then plunged
again.

Another brief rally was killed by the release of Q1 earnings on Oct. 25,
which showed a loss of $14.9 million, or $1.04 per share, nearly double
the $8.2 million, or 72 cents per share, loss from last year’s first
quarter.

Trading Tuesday afternoon at 20 5/8, NZRO has fallen 16 percent since releasing
quarterly results.

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