Up 16% Since Sept 16: WEBDEX Climbs On Widespread Deals

eBay slates to debut today at $18 per share. If so, that values the
“personal auction” firm at more than $900 million fully diluted IPO market
capitalization or about 30x annualized sales according to our
analysis.

The one thing attractive about ebay is its model–e-commerce.
That means most of the action on the site centers around buying and
selling. ebay’s positive earnings also may get Wall Street’s attention, but
we don’t think they’ll last in a marketing war that may
emerge.

Mainstream media will say ebay is an anomoly for Internet IPOs
but we don’t think so for those with “e-commerce” central to their model.
More about IPOs tomorrow. For now what about ebay and the top sites it must
content with?

We think over time auctions become another aspect of larger
traffic sites, with Yahoo-Onsale trying to mimic that. Does it hurt ebay?
Maybe a little but it has critical mass in our opinion.

ebay vitals: During the first half of 1998, the number of registered eBay
users grew
from approximately 340,000 to over 850,000 and the number of simultaneous
auctions being conducted through eBay increased from approximately 200,000
to over 500,000. As of August 31, 1998, ebay had over 1 million registered
users and over 600,000 auctions listed in 1,085 categories.

The one
thing ebay doesn’t enjoy is a top 20 user site status, and that’s the group
that could rise to challenge its auctions as Yahoo-Onsale already have.
Expect more to follow.

Still, the IPO cap puts ebay in the elite group in
terms of market cap valuation. The average trading market cap or private
market value of firms–Web sites in Mecklermedia’s WEBDEX (which computes
Website user values) is $1.6 billion, not counting Yahoo’s $11 billion. At
least two of the 10 range from $700 million to $800 million.

And more than ebay is reviving the interest in Internet stocks. The overall
market
moved on rate talk September 23 and Internet companies cut deals left,
right and center lately.

As a result, since September 16, WEBDEX gained
16%, much of it yesterday. Leading the pack was Excite’s 30% rise
(NASDAQ:XCIT) with a deal with DELL to provide personal pages to DELL’s new
ISP as part of the box program (see InternetNews.com for the story). On a
WEBDEX basis Excite came in at $116.

Right behind that zoomed Yahoo!(NASDAQ:YHOO), up 26% on a deal with AT&T
for access to power Yahoo Online. This follows after MCI disconnected on a
similar deal
as a result of it merging with WorldCom and MCI selling its Internet side
to Cable & Wireless.

Lycos (NASDAQ:LCOS) was in lock step with that
percentage, up 26% also as investors react to its climb July vs. August,
from 7 to 4 in top 10 Web site rankings according to Relevant Knowledge
(www.rkinc.com).

But there’s a $34 gap in value per user between Lycos
(#4 remember) and Excite (#5). LCOS at XCIT value per user level implies
more than $2 billion market cap for the spidertown. To get there it may
have to do its own DELL-like deal.

On the other hand, Lycos has 1 million
more users now that its community sites factor into the overall tally.
Excite has no community, one of the Web’s fastest-growing
areas.

GeoCities (NASDAQ:GCTY), the leader in community, popped 13% in
WEBDEX to $53 per user. Infoseek (NASDAQ:SEEK) debuted its Express product
that commoditizes the search engine results and streamlines the process (if
you are in the mood to download it).

Infoseek’s deal with Disney began
to take flesh (like on of those cartoon figures being drawn in as we
watch). First effort will be called “go network” at go.com. The news sparks
some interest in SEEK and hence the 18% uptick in value per user to $69.

For all the hoopla, SEEK is still down 6% from before the Disney deal was
announced until September 23. That’s what an investment of $430 million
plus Starwave has yielded SEEK so far–nada. It’s time to take off the
mouse gloves and go for it, this should be a $2 billion entity. Go.com will
test if it goes or not.