The Simple Law of Supply And Demand

Last Friday I wrote that five Internet companies had priced shares for
public trading that day. It turns out that before the market closed, a
sixth ‘Net company – AppNet Systems – also launched an IPO.

That half-dozen public offerings by Internet-related companies on Friday
thus breaks the record of five set May 26.

These two trading days share another distinction: Together they have
spawned five of the current 10 worst Internet IPO debuts of 1999 and
serve as an object lesson on the law of supply and demand.

Now heading that “10 worst” list is a company that went public Friday,
an achievement not likely celebrated with champagne in the issuing
firm’s corporate headquarters.

After offering 4.5 million shares at $10 each, saw it
stock open at $9.63 and finish Friday at $7.63, or 24% below the offer
price. That’s the worst stock debut of 1999 by an Internet company,
easily outdistancing Digital Lava’s minus 14% close on Feb. 17.

Streamline’s IPO suffered from several problems, including a saturated
Internet IPO market and a dramatic spring drop in Internet stock values.

But I think the Westwood, Mass.-based company also was punished by
investors for being a largely diluted Internet play.

Streamline, formed in 1993, is in the business of delivering to
customers’ homes a wide range of items, including groceries, dry-cleaned
clothing and rented videos. The company has operated exclusively in the
Boston area since its inception in 1993, but plans to expand to
Washington, D.C. later this year and other cities by 2001.

In its S-1 filing with the Securities and Exchange Commission,
Streamline says that the majority of customers who use its service do so
through the Internet, though orders can be taken via fax and the

(It’s interesting to note, by the way, that while the S-1 filing refers
to the company as, its real name has always been, and as
far as I know still remains, Streamline.)

The bottom line is that Streamline is far from a pure Internet company,
and newly skeptical investors may be shying away from those sorts of

Meanwhile, two of Friday’s other five Internet IPOs fizzled out the
gate. The aforementioned AppNet and Student Advantage each closed at
their respective offer prices of $12 and $8 per share, and join
Streamline in the group of this year’s least inspiring street debuts.

The best showing by new ‘Net stocks on Friday belonged to Internet
consulting services company Viant, which finished at $24.38, or 52%
above its $16 offer price, edging out search engine site, which
closed at $22.38, or 49% above its $15 offer.’s $8.75 close putit 25% above the $7 offer price.

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