Some Things Are Looking Up

Let’s pretend you missed out on the astounding Internet stock run-up that extended from 1998 through last March, as well as the subsequent crash that made 2000 the worst year ever for the Nasdaq.

Rather, you were a latecomer to the game, placing bets only at the beginning of this year. Given the carnage that has visited ‘Net stocks in the past two trading days alone, you probably wish you had stayed safely on the sidelines, right?

Not necessarily. If you had purchased $1,000 of shares in virtual private network vendor V-One on New Year’s Eve, that investment today would be worth $4,800. If you had dropped $1,000 back then on access provider Log On America, you could cash out today for $4,792. Then there’s E-Loan: a $1,000 invested in the online loan processor at year’s end could be sold (theoretically) for $4,180.

Of course, you would buy shares of these companies only if you dabbled in penny stocks, for all three were trading well below $1 per share as 2000 drew to a close. Even with its nearly fivefold increase, LOAX is still under $2, and EELN is barely above that. Here’s a list of the top five Internet stock gainers so far this year:

                         Dec. 29   Feb. 20    Pct.    Current
                          Price     Price     Gain    Mkt. Cap

VONE    V-One             0.63      3.00      380%     $66.4M
LOAX    Log On America    0.31      1.50      379%     $13.2M
EELN    E-Loan            0.50      2.09      319%    $111.5M
ADBL    Audible           0.44      1.63      270%     $44.8M
BYND        0.16      0.53      240%     $21.6M

The fact is that most investors wouldn’t look twice at any of these companies, since most are on life support and not likely to be around to play this game a year from now.

But a number of larger Internet companies have registered strong (if not triple-digit) gains in the early weeks of 2001. Restricting ourselves to players with market capitalizations of at least $1 billion, here are the leaders:

                           Dec. 29   Feb. 20   Pct.   Current
                            Price     Price    Gain   Mkt. Cap

SBYN    SeeBeyond           10.25     19.75     93%     $1.4B
ELNK    EarthLink            5.03      9.13     81%     $1.9B
HOMS       20.13     34.00     69%     $2.8B
MONE    MatrixOne           18.19     27.50     51%     $1.2B  
CKCM    Click Commerce      20.88     28.63     37%     $1.1B
EBAY    eBay                33.00     44.56     35%    $11.9B 
SONS    Sonus Networks      25.25     33.56     33%     $6.2B
AOL     AOL Time Warner     34.80     44.95     29%   $194.5B
PRSF    Portal Software      7.84      9.94     27%     $1.7B
TRLY    Terra Lycos         10.56     13.31     26%     $6.8B

When compared to the astronomical gains posted by companies in the first chart, the performances of the large-cappers listed above may not be eye-popping. But in the long run, where would you rather have your money?

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