Initial Public Offering (IPO) - More E-commerce Companies Go Public, 1997-1999

MORE E-COMMERCE COMPANIES GO PUBLIC (1997-1999)

More well-known e-commerce companies began to go public in 1997. Online bookseller Amazon.com held its IPO in May 1997. The company sold 8 million shares at $18 a share after the market closed. The next day the stock opened at $27 a share and rose to $80 before closing at $25.50.

High-speed Internet access provider @Home filed for an initial public offering in May 1997 and went public in July. Its stock more than doubled on the first day of trading, from its initial $10.50 price to a high of $25.50 before settling at $19. The IPO gave @Home proceeds of $94.5 million and a market capitalization of more than $2 billion.

The success of Amazon.com 's and @Home's IPOs created an air of exuberance around high-tech and Internet IPOs that lasted for a couple of years. Neither Amazon.com nor @Home had shown any profits at the time of their IPOs, yet their stock increased in value following their IPOs. At the end of 1997 Internet advertising network DoubleClick filed for an IPO that took place in February 1998 and raised $62.5 million.

Online auction site eBay went public in September 1998 with an IPO that raised more than $60 million. When eBay held its IPO, investors quickly bid up the initial offering price of $18 to more than $54. After the stock settled down to around $47 a share, analysts noted that the valuation reflected consumer excitement over online auctions and investor awareness of the potential for profit. At the time most Internet ventures were losing money, but eBay managed to show a positive net income of $348,000 for the first six months of 1998.

The IPO market for Internet companies that had yet to turn a profit remained strong in 1999. With its venture capital running out, online retailer eToys turned to the public equity markets and held its IPO in May 1999. Eight percent of the company was offered to the public. Shares began trading on the NASDAQ on May 20, 1999, at $20 a share, raising $166 million for eToys. The stock rose as high as $85 on the first day of trading and ended the day around $76.50, giving eToys a market value of $7.8 billion, more than the $5.6 billion market value of established retailer Toys 'R' Us.

Priceline.com 's IPO on March 30, 1999, was one of the hottest Internet IPO's of the year. Interest in the IPO was so strong that Priceline.com was able to raise its IPO price twice before the offering, first from the original $7-$9 range to $12-$14, then to the final offering price of $16. The company raised about $115 million from the initial sale of shares at $16 each. By April 18 the stock reached nearly $60 a share. When the company announced on April 26 that more than 1 million customers had tried Priceline.com in its first year, the stock rose to $121 a share. Forbes noted that founder Jay Walker's initial $25 million investment in the company was now worth $4.3 billion.

In the area of online publishing and bookselling, BarnesandNoble.com and Hoover's Inc. both enjoyed successful IPOs in 1999. BarnesandNoble.com raised more than $430 million with its IPO in May 1999, selling more than 24 million shares at $18 a share. At the end of its first day of trading, BarnesandNoble.com had a market capitalization of $2.52 billion. Hoover's, a business information service, went public on July 21, 1999, with an initial public offering that netted $42 million for the company. For its fiscal year ending March 31, 1999, Hoover's reported revenue of $9.2 million and a net loss of $2.2 million.

Online research firm Media Metrix went public in May 1999 with an initial public offering that raised $51 million. In July 1999, 64 companies held their IPOs, making it the busiest month for IPOs since November 1997. The strong market for IPOs helped Internet companies such as Drugstore.com and MP3 more than double their stock prices on the first day of trading.

Among technology companies, the successful IPO of Red Hat, a seller of Linux software, in August 1999 helped to generate interest in Linux. The stock opened at $14 a share and climbed to more than $50 on the first day. The volatile stock later rose as high as $123 in September.