Like
Scrooge, Internet stocks have been on a wild ride from the ghost of
Christmas past, present and future. This holiday season Wall Street shopped
early (November) for e-tail stocks and now has turned its fickle attention
to Internet IPOs.
The past three Internet stock offers from very
different companies have done well in the aftermarket: EarthWeb,
theglobe.com and the latest reindeer to pull the IPO sled, TicketMaster
Online-CitySearch (NASDAQ:TMCS).
TMCS sold 7 million shares at $14 per
share, raising gross proceeds of $112 million. Of that, $50 million
immediately goes to a loan from TMCS majority equity holder USA Networks,
run by Barry Diller of TV biz fame.
TicketMaster Online-CitySearch IPO
original target | actual IPO | at high 12/3 | close 12/3 | |
Price per share | $ 9.00 | $ 14.00 | $ 56.38 | $ 40.25 |
Market capitalization | $ 625.38 | $ 972.81 | $3,917.30 | $2,796.83 |
Fully-diluted | $ 783.06 | $1,218.09 | $4,904.99 | $3,502.01 |
Revenue multiples | ||||
IPO cap/annualized revenues | 18 | 27 | 111 | 79 |
Fully diluted/annualized | 22 | 34 | 139 | 99 |
Fully diluted/1999 est. revenue | 14 | 22 | 89 | 64 |
all figures in millions, except share price and multiples (c) 1998
Internet.com LLC
The ticket seller and local guide firm soars on its IPO December 3 after
pricing 7 million shares above range at $14, opening at $52, climbing as
high as $56.375 before closing at $40.25 per share. Volume is 14.3 million
shares or twice the offering. TMCS priced at a 56% premium to its original
target estimate in early filings.
On a fully-diluted basis our analysis
shows TMCS at $1.2 billion we think TicketMaster Online-CitySearch debuted
at fully-diluted 22x estimated 1999 revenue.
At its peak of $56.375, TMCS
held a $3.9 billion market cap or about 89x our estimated 1999 revenue for
the company. Fully-diluted market cap pushed the multiple to 139x. By the
close of trading its first day yesterday, at $40.25 per share, TMCS was at
64x next year’s revenue.
Just six months ago CitySearch was a standalone firm with its own IPO
plans that would have valued the guide/directory at about 21x our estimated
revenues for CitySearch as our table illustrates:
CitySearch’s value before the merger | |
Shares offered | 4.00 |
Greenshoe | 0.60 |
Target price | $ 13.00 |
Proceeds | $ 52.00 |
Shares out | 20.79 |
Primary market cap | $ 270.25 |
FDS | 24.08 |
FDS market cap | $ 313.08 |
Working cap | $ 54.57 |
Long-term debt | $ 2.32 |
Enterprise value | $ 260.83 |
1997 sales | $ 6.18 |
Six mos. To June ’98 | $ 5.58 |
Annualized sales | $ 11.15 |
est. 1999 revenue | $ 15.00 |
MarCap/’98 sales | 24.2 |
MarCap/’99 sales | 20.9 |
all figures in millions, except share price and multiples (c) 1998
Internet.com LLC
Shortly after filing its IPO intentions in May, CitySearch cancelled its
plans, merged with USA Network’s TicketMaster Online this Fall and the
combined entity stepped up to the plate on Wall Street with the
successful IPO. One area of concern for us centers on the heavy losses TMCS
posted for the nine months ending September 30, however, a $56.8 million
loss.
And CitySearch plans on setting up its own local content
productions which we think may be a mistake due to the high cost of
creating deep-enough content for the cities it covers.
CitySearch
produces 13 city guides and owns seven of them, with six produced by media
partners. CitySearch’s revenue model relies on small businesses paying for
placement or ads in the guide.
The focus on new issues came at the expense of the handful of Internet
stocks in IPODEX, each of which had gains and then profit taking kick in to
close the period November 25 to December 3, down a blended 12%. Cyberian
Outpost (NASDAQ:COOL), which ran to a new all-time high of $45.50 on hordes
of retail investors piling in this week, ended up losing 36% for the
period.
INTERNET.COM’S | Ticker | Share price | Share price | % change | % change |
IPODEX | symbol | 12/3/98 | 11/25/98 | period | from IPO |
Verisign | VRSN | $38.69 | $39.13 | -1.1% | 176.3% |
Exodus | EXDS | $36.00 | $36.88 | -2.4% | 140.0% |
Broadcom | BRCM | $91.88 | $96.63 | -4.9% | 282.8% |
eBay | EBAY | $187.00 | $204.50 | -8.6% | 938.9% |
CDnow | CDNW | $15.50 | $17.00 | -8.8% | -3.1% |
Inktomi | INKT | $124.00 | $136.25 | -9.0% | 588.9% |
EarthWeb | EWBX | $37.25 | $41.13 | -9.4% | 166.1% |
24/7 Media | TFSM | $22.00 | $24.50 | -10.2% | 57.1% |
ISS Group | ISSX | $31.38 | $35.44 | -11.5% | 42.6% |
Beyond.com | BYND | $22.75 | $25.88 | -12.1% | 152.8% |
Digital River | DRIV | $18.13 | $21.75 | -16.7% | 113.2% |
Netgravity | NETG | $17.75 | $22.19 | -20.0% | 97.2% |
DoubleClick | DCLK | $33.63 | $43.13 | -22.0% | 97.8% |
GeoCities | GCTY | $29.38 | $38.31 | -23.3% | 72.8% |
Broadcast.com | BCST | $52.88 | $70.63 | -25.1% | 193.8% |
theglobe.com | TGLO | $28.88 | $40.13 | -28.0% | 220.8% |
Cyberian Outpost | COOL | $25.13 | $39.50 | -36.4% | 39.6% |
TOTAL | $787.06 | $893.44 | -11.9% | 224.6% | |
AVERAGE | $49.19 | $55.84 | -11.9% | 224.6% |
Websteader theglobe.com (NASDAQ:TGLO) also dropped, ending on the down side
28% as traders and investors geared up for the next IPO or for the basket
of e-tail stocks. These include several old line land-based stores
proclaiming Internet intentions and seeing shares soar.
We would
highlight the notion that simply because a company opens a Web
site (KTEL,
Sharper Image, etc.) doesn’t always mean it’s a winner. Our question is
this: what took them so long?
On new IPOs in the pipeline, uBid’s due to
start trading today. The Web-based auctioneer joins an increasingly crowded
auction space. uBid is more like Egghead.com (NASDAQ:EGGS) than Onsale
(NASDAQ:ONSL).
EGGS closed December 3 at $16.0625 per share, or a market
cap of $392 million. But shares have traded between $4 and $40 the past 52
weeks, a display of the volatility inherent in many Internet stocks and
perhaps a foreshadowing of the risk of something like uBid.
moment of 1998 – please
click here.
Attention Internet Startups! LaunchPad West StartUp
Pavilion, part of Spring Internet World ’99, one of the world’s
largest Internet industry trade shows offers exhibit space for startups
ONLY at a reduced price in order to meet their often limited capital
available at the startup stage. Contact Sean Moriarty (hurry, space
limited): mailto:moriarty@mecklermedia.com
