Leaps and bounds would be an understatement in describing the activity of Internet stocks of late, as they climbed even higher today--into record territory.
The share prices are mind boggling, even to longtime Wall Street analysts, because many of the companies--Yahoo is an exception--still are losing money, and continue to face cutthroat competition. Some analysts are wondering aloud when the Internet stock bubble will burst.
Still, Net stocks have blown past other technology issues with stellar gains. The sector in general is reaping the benefits of a growing online population, fueled in part by low-cost personal computers.
"Low cost PCs are making the waves [for Internet companies]," said Derek Brown, an analyst at Volpe Brown Whelan. "They are coming on so strong and adding to the online population."
Despite the risks, "people are finding solace in Internet stocks," Brown said. Unlike other technology issues, most Internet companies are not exposed to the current economic crisis in Asia, nor are they affected by falling computer and peripheral prices.
Yahoo has seen its stock appreciate nearly 40 percent during the past month, and today climbed as high as 103-1/4, up from 97-13/16 at yesterday's close.
That tremendous increase in value--nearly 55 percent in 1998 alone--has led some analysts to rethink Yahoo's short-term potential.
Everen Securities today downgraded its short-term rating on Yahoo to "market perform" from "outperform," based on valuation, because the stock is trading at 140 times projected fiscal-year 1999 earnings. The firm maintained its long-term "outperform" rating on the stock, as well as its 18-month price target of $105 per share.
Lycos said yesterday that it closed six agreements totaling more than $30 million in e-commerce, advertising, and sponsorship fees during the month of March. CDnow (CDNW), E-Loan, GetSmart, HomeShark, Preview Travel, and Realtor.com were among the partners.
Excite (XCIT) and Infoseek (SEEK) also closed in on their record highs. Excite traded as high as 57-1/4, just 2 points shy of its all-time high of 59-1/4. Infoseek traded at 21-13/16, about 1 point off its high of 22-7/8.
There is a changing perception about the Web, and people are buying products online, said Brown. "As more people continue to do so, that will drive the business models."
The first calendar quarter closed earlier this week, on March 31, so companies have yet to release their early 1998 results for e-commerce. But Brown pointed to last quarter's strong results and noted that there hasn't been any indication the trend won't continue.
Other companies that are riding high include America Online (AOL), which is benefiting from price increases at WebTV and AT&T (T). Its stock also hit a new high as it gained 2-5/8, up from yesterday's close of 72-15/16.
Amazon.com gained 5-9/16 to hit 95-11/16, also a record. In addition, CDnow was hoisted into record territory, hitting 30-3/8, up 15 percent from yesterday's close of 26-1/2.