Consumer auction site network FairMarket Inc. (Nasdaq: FAIM) gained 31 7/16 to 48 7/16 in debut after pricing 5 million shares at $17 each for trading Tuesday. Shares priced above their range of $13-15 each, which had been raised from an original $9 to $11 a share estimate.
The deal, underwritten by Deutsche Banc Alex Brown, Robertson Stephens and U.S. Bancorp Piper Jaffray, will leave about 26.5 million common shares outstanding after the offering.
The company (profile) allows its customers to use custom-branded auction sites and distribute listings across its network. It hosts and maintains these private-label online auction sites for business merchants, Internet portal sites and other companies with a web presence.
The company should do well, considering Microsoft (Nasdaq: MSFT) and Excite (Nasdaq: ATHM) both have a stake in it. But "auctions are popping up everywhere in the consumer space," said Kenan Pollack of IPO Central, who is unsure of how the company will fare in the long term with competition from established players such as eBay (Nasdaq: EBAY).
Like most fledgling companies, losses outweigh revenue. For the year ended December 31, FairMarket had a net loss $16.5 million of on revenue of $2.2 million, as opposed to net loss $1.4 million on revenue of $4 000 in 1998.
FairMarket's primary competitors are providers of hosted auction services, such as auctions.net, bid.com (Nasdaq: BIDS), Bidland, DealDeal.com and OpenSite. Destination auction sites such as Amazon.com (Nasdaq: AMZN), eBay and Yahoo! Auctions (Nasdaq: YHOO) also pose a threat, the company said.
FairMarket clients include CMGI's (Nasdaq: CMGI) AltaVista, Lycos (Nasdaq: LCOS) and Sportsline.com (Nasdaq: SPLN).