TheGlobe.com took Wall Street by surprise with its initial public offering this morning, blasting out of the gate with its first trade of the day at 87 a share--a ninefold increase from its target price.
TheGlobe.com had set a target price of
9 a share last night, then saw its shares soar as high as 97 a share this morning before settling back to close at 63.5.
The company ended the day by posting the largest first-day gain of any
IPO, said Richard Peterson, an analyst with Securities Data. The previous record was held by Broadcast.com, which ended the day with a 249 percent gain over its target price.
Just last month, The Globe.com's IPO plans were all but dormant. The company lowered its pricing range due to sagging markets and waning investor interest before postponing the offering altogether.
TheGlobe.com's IPO performance comes on the heels of a successful
IPO earlier this week from EarthWeb, another Internet company that has yet to turn a profit. Many Internet companies have shelved their IPO plans in the past month, especially after profitable online auctioneer eBay raised the bar on investors' expectations when it went public with a bang in September.
EarthWeb's strong debut had IPO analysts declaring that Internet IPOs had regained favor among jittery investors, and TheGlobe.com's performance seems to confirm that conclusion.
"With TheGlobe.com, they're back real strong," Peterson said. "These back-to-back deals have given Internet IPOs new life and investors won't stop."
Although the holiday season from Thanksgiving through the New Year
tends to be slow for IPOs, the recent surge in investor interest may keep IPOs and secondary offerings hopping through at least the first week of
December, Peterson said.
He noted that there are roughly a dozen Internet IPOs that have been postponed. Some analysts believe those companies will wait until January to hnit the public trough because they may have to rework their prospectus' and produce a roadshow.
TheGlobe.com raised $27.9 million in capital by floating out 3.1 million
shares. Based on its nearly 9.8 million shares outstanding, and the price of its first trade of the day, the company's market cap reached $841.8 million today.
"It's like financial fantasy world," Peterson said. "It's like someone
played a Friday the 13th trick. This is an IPO that was ignored, and then it comes back with a bang. It's all that Internet mania stuff."
The company reported revenue of $2.7 million for the nine months ending
September 30, compared with $415,000 posted a year ago. Its net loss widened to $11.5 million for the nine-month period, from $2.6 million a year ago.