The continued demand for new Internet IPOs sent Web community builder
company the globe.com’s stock out of this world Friday.
After pricing at $9, the company’s shares soared as high as $97, making it
one of the biggest runs ever for any Internet offering. By the time the
market closed, shares of TGLO waned somewhat and dropped to $63.50 per
share or 113x revenue. Compare that to the IPO at $9 or a more justifiable
15x revenue. For the first six months this year theglobe.com posted $1.1
million revenue
We attribute the huge gains not to an underlying fundamental business model
advantage but simply to the insatiable hunger by individual investors for
Internet issues.
At its peak, our analysis shows TGLO traded at more than $1 billion
market value, or what we target as 169x estimated 1999 revenue. For
comparison, high-flying Internet stocks with brand name and earnings
already on the table typically command a 40x to 60x revenue multiple.
The biggest driver for the TGLO share rise today seems to be individual
investors who want to “get in on the next big one” and who know little, if
anything, about the stocks they’re buying. The first rule of investing is
know what you’re investing in. Those trying to “dip and flip” (buy a stock
in the hopes it keeps rising, just to dump it a few hours later) may find
themselves getting burned–most times that’s the individual investor.
theglobe.com’s rocket ship follows that of EarthWeb (NASDAQ:EWBX) which
debuted this week also to great demand. See InternetNews.com and search the
archives of Internet Stock Report for more information.