Archive for Wednesday, May 26, 1999


May 26, 1999


The lukewarm reception is more evidence that investors' appetite for so-called dot.coms is waning.

New York --'s much-anticipated initial public offering of stock received a subdued welcome Tuesday on Wall Street, the latest sign that the craze in the stock market may be waning.

Although shares of the online bookseller rose 27 percent above their offering price, they failed to triple or quadruple in value like many Internet peers have done in their first days of trading. shares went public at $18 per share and closed at $22.93 3/4 on the Nasdaq Stock Market.

"Investors just aren't going after Internet stocks like they used to," said Brian G. Belski, chief investment strategist at George K. Baum & Co., in Kansas City, Mo. "The market is moving away from sex appeal and more towards substance, and we are really seeing that in the prices of Internet stocks."

Internet stocks, especially IPOs, have been the darlings of Wall Street for the past year, with investors embracing just about any company with online operations or even online plans.

But the appetite for cyber-stocks appears to be weakening. In recent weeks, many of the biggest names on the Web -- including "stalwarts" such as and eBay -- have seen their stocks slump, some falling as much as 50 percent from their peaks.

On Tuesday, the Dow Jones Internet index, a collection of 40 companies, fell nearly 8 percent.

In addition, there's been a cool response to new Internet issues. Gail Bronson, an analyst with the newsletter IPO Monitor, estimates that of the 50 or so IPOs this year, most companies' stock is trading below first-day highs.

Online toy retailer eToys, for instance, more than quadrupled in its first day of trading last Thursday, soaring from its offering price of $20 to close at $76.56 1/4 on the Nasdaq. But since then, it has fallen more than 30 percent from that peak.

And the relatively tepid demand for shows that investors aren't as willing to throw their money into Internet IPOs as many clamored to do in the past.

"Investors are putting more emphasis on the quality of the businesses that they are putting their money into," Belski said.

"When you buy Alcoa, you know they make aluminum. If you buy 3M, you know they make Post-It notes and lots of other things," he said.

"Whereas with the Internet, there are more questions about whether these businesses will make money and be successful in the longer term."

Like many online companies, is a fast-growing, but money-losing business. The company, in a filing with the Securities and Exchange Commission, said it lost $20.2 million in the first quarter, up from a loss of $9.5 million a year ago.

Sales, however, rose to $32.3 million, an increase of 25 percent from the fourth quarter of 1998 and up 259 percent from year-ago levels.

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