Stock in MarketWatch.com Inc., which runs a popular online financial news site aligned with CBS, soared in its debut Friday as Internet-hungry investors jumped at the first new stock offering of 1999.
Shares in the operator of the CBS.MarketWatch.com site closed at $97.50, nearly six times higher than their initial offering price of $17, on the Nasdaq Stock Market. The shares had ballooned to a high of $130 during the day.
The lust for stocks with any connection to the Internet bestowed the money-losing Web site operator with a $1.1 billion market value after just one day of trading.
But analysts believe MarketWatch has a stronger chance for success than most instant-hit Internet stocks, because it carries the trusted CBS brand name. The built-in promotion of its site on television provides a competitive advantage over most rivals.
"In an environment where so many online entities must build their brands from scratch, if you bring a brand like this to the table it gets immediate credibility," said Mark Hardie, an analyst at Forrester Research.
MarketWatch.com was founded in October 1997 as a joint venture of CBS Corp. and Data Broadcasting Corp. It competes with a huge array of financial news and data sites at a time when the demand for financial news and advice from all types of media, particularly the Internet, is exploding.
Media Metrix, a private Internet research firm, said CBS.MarketWatch.com had 1.4 million individual visitors in November, up from 1.2 million in October and 1 million in September. The figures do not include repeat visitors.
In its regulatory filing, MarketWatch.com said the site had 2.2 million visitors in October, compared to 785,000 in March, but did not indicate if those figures included repeat visitors.
Like so many Internet stocks that gain immediate favor on Wall Street, MarketWatch.com is losing money. The company lost $8.2 million on revenue of $4.5 million through the first nine months of 1998.
Peony Kao, an analyst at Renaissance IPO Fund in Greenwich, Conn., said MarketWatch.com is unlikely to turn a profit before 2002. Still, she said, among the rash of inflated Internet stocks MarketWatch.com does stand out because of its CBS affiliation.
CBS stock climbed 81 1/4 cents to $34.81 1/4 on the New York Stock Exchange. But Data Broadcasting shares, which had soared in advance of the MarketWatch.com offering, dropped $9.43 3/4, or 30 percent, to $21.75 on Nasdaq.
CBS and Data Broadcasting each own a 38 percent stake in MarketWatch.com after the offering of 2.75 million shares. MarketWatch plans to use proceeds from the stock sale to increase marketing of its site, pay off debt and pursue acquisitions or other alliances.
Written By Eric R. Quinones, AP Business Writer