iVillage hits the roof on its debut
Shooting out of the gate this morning, iVillage runs up nearly 300 percent on its first trade, as the women's network becomes the latest Internet company to join the public market.
Shares of iVillage hit 95.88 on the company's first trade, up from an initial price of 24. But by the end of the day, iVillage shares edged down to close at 80.13.
Nonetheless, the shares ended the day up by more than 233 percent, and the company had a market valuation of $1.86 billion.
Strong demand for iVillage had been anticipated given that the company nearly doubled its pricing range to 22 to 24 a share from 12 to 14. iVillage last night settled on the high end of the pricing range.
If iVillage can close the day above 100 a share, it would set a new record for an Internet issue on its first day of trading, IPO analysts said.
Most Internet IPOs this year have gained 144 percent on their first trading day, said Richard Peterson, chief market strategist with Securities Data/Thomson Financial.
Although iVillage got off to a strong start, the company did not beat the first-day gain record set by TheGlobe.com, which rose more than 600 percent on its first trading day last November.
Peterson explained that iVillage fell short because of the large increase in its trading range prior to going public. For iVillage to post a comparable increase, the company would have had to close today at 169.44.
While not reaching the dizzying height of iVillage's IPO, Cheap Tickets also soared on its first day of trading today. The discount airline ticket e-tailer more than doubled, rising 108.33 percent to 31.25.
The Honolulu-based company upped its IPO price to 15 a share because of heavy investor demand yesterday. The original price range was 11 to 13.
Cheap Tickets plans to use the net proceeds from its IPO for advertising, development of technological infrastructure, and general corporate purposes.
Other Internet companies that have gone public this year include financial site MarketWatch.com, online healthcare company Healtheon, and VerticalNet, which provides business-to-business Web hosting.
MarketWatch.com, marking one of the more successful offerings at the start of the year, soared more than fourfold above its target price on the first trade of the day last January. The company closed at 97.5 a share after setting an offer price of 17.
Healtheon, a start-up backed by Netscape cofounder Jim Clark, was priced at 8 a share and quadrupled on its first trade of the day. And VerticalNet jumped more than threefold on its first trade of the day from its offer price of 16 a share.
"The IPO market for Internet stocks has been doing exceptionally well. About a dozen issues have gone out this year, and nearly all have doubled in value since their IPO," analyst Peterson said.
He added that investors' appetite for Internet IPOs is a repeat of the springtime boom of 1997.
"It may be even more so with the surge in online trading," Peterson said.
Other Internet companies poised to go public soon include Priceline.com and eToys, and recent companies to file for an IPO include Spanish-language portal Starmedia Network and online bookseller Barnesandnoble.com, which earlier this week refiled their IPO plans.
Internet issues have been on a roll since last fall, when online auctioneer eBay ended a month-long IPO dry spell with its issue. eBay shares rose 163.2 percent on its first day of public trading. The company, one of the rare Internet companies to post profits, closed that day at 47.375, up from its target price of 18 a share.