More Flop Than Pop

That last month saw a big drop-off in the average first-day performance
of Internet IPOs is no surprise to market watchers.

What might be surprising, however, is how bad it really was, as
reflected by the numbers.

There were 26 Internet IPOs in May, a record total that easily surpasses
the previous high of 17 set in April.

But the average percentage gain in the first-day closing price over the
offer price for Internet IPOs in May was a mere 59%, by far the worst
debut average of 1999. (The others were: January, 241%; February, 122%;
March, 134%; and April, 116%.)

Look at the list below of the year’s 10 worst Internet IPO debuts and
it’s easy to see why: eight of the 10 IPOs on that list came out in May.

And unlike April, when there was a marked drop in first-day performance
in the wake of two mid-month corrections (see Midday
Report, May needed no cataclysmic events to account for its poor
showing; things just started bad and got worse.

The eight IPOs that went out in the first week of May averaged an 80%
first-day gain over offer price. After that, it dropped to 60% (seven
IPOs) in the second week, inched up to 67% (five IPOs) in week three and
plunged to 35% (six IPOs) in week four.

The villains here, of course, are the glut of Internet IPOs chasing
investment capital and a seasonal slowdown. And with more than 80
Internet IPOs circling the airport, the rest of the spring and summer
could witness a fierce and bloody dogfight for increasingly choosy
investor dollars.

10 Best of 1999

1. CBS MarketWatch.com (Jan. 15) – 474%
2. priceline.com (March 30) – 331%
3. Healtheon (Feb. 11) – 292%
4. eToys (May 20) – 283%
5. Log On America (April 22) – 250%
6. iVillage (March 19) – 234%
7. Rhythms NetConnections (April 7) – 229%
8. TheStreet.com (May 11) 216%
9. Tut Systems (Jan. 29) – 219%
10. Marimba (April 30) – 203%

10 Worst of 1999

1. Digital Lava (Feb. 17) — -14%
2. ZipLink (May 26) — -12%
3. Juno Online Services (May 26) — -11%
4. COMPS.COM (May 5) — -5%
5. fashionmall.com (May 21) – 0%
6. Intelligent Life (May 13) – 0%
7. EDGAR Online (May 26) – 0.63%
8. NetObjects (May 7) – 8%
9. @plan.inc (May 21) – 14%
10. TownPages Net.com (April 30) – 16%

Here are all Internet IPOs in May and their first-day performance:

May 4 – MapQuest, 49%
May 4 – Flycast Communications, 19%
May 5 – Silknet Software, 134%
May 5 – COMPS.COM, -5%
May 6 – Portal Software, 167%
May 7 – NetObjects, 8%

May 7 – Media Metrix, 168%
May 7 – AdForce, 100%
May 11 – TheStreet.com, 216%
May 12 – BiznessOnline.com, 19%
May 12 – CareerBuilder, 23%
May 13 – Intelligent Life, 0%
May 14 – Scient, 63%
May 14 – NextCard, 68%
May 14 – Alloy Online, 33%
May 19 – OneSource Information Services, 19%
May 20 – CAIS Internet, 17%
May 20 – eToys, 283%
May 21 — @plan.inc, 14%
May 21 – fashionmall.com, 0%
May 25 – barnesandnoble.com, 27%
May 26 – ZipLink, -12%
May 26 – StarMedia Network, 74%
May 26 – Juno Online Services, -11%
May 26 – EDGAR Online, 0.63%
May 26 – DLJdirect, 50%