Online Retailer Tests IPO Waters
Less than a month after withdrawing an IPO filing, online retailer Computer Literacy rose 90 percent in its stock market debut Friday.
The offering came only after a couple of false starts that may have hurt the stock's early performance.
The stock finally opened at 23 at about 12:20 p.m. ET but fell as low as 17 7/16 in early trading before closing at 19 15/16, good for a premium of 99 percent above the offering price.The Sunnyvale, Calif., company (CMPL) priced its 3 million-share offering at $10 per share, above the original $7 to $9 range set by lead underwriter NationsBanc Montgomery Securities.
Early in the morning, two small trades of 500 shares at 15 were recorded, but NationsBanc Montgomery Securities syndicate manager Dick Smith called that a false start. "It's a stray that doesn't mean anything," he said. "It's some small investor pushing buttons out there in e-commerce land."
Indeed, small false trades for anticipated IPOs have been appearing more frequently recently.
Subsequently, a number of trades at 30 - which would have given Computer Literacy a first-trade premium of 200 percent - began flying across the tape. Although Smith couldn't be reached for comment on that development, his assistant said those trades were also not legitimate.
The early confusion may have contributed to the stock's fall in price from its first trade, said Steven Tuen, research director of IPO Value Monitor. But Tuen said Computer Literacy was hurt more by the volatility in Internet stocks. "It got caught in the downdraft," Tuen said.
Of course, another part of the problem could be Computer Literacy's story. The company sells mostly technical books on its Web site, and the growth possibilities may be limited, Tuen said.
Not to mention that the company has some serious competition, most notably online bookseller Amazon.com (AMZN). "Yeah, there are a couple of obscure names [in the space]," joked Tuen.
In late October, the company officially withdrew its July IPO filing but quickly filed a neprospectus with the exact same estimated pricing terms after successful debuts by EarthWeb (EWBX) and Theglobe.com (TGLO), which rose 248 percent and 606 percent on their first days of trading, respectively.
Computer Literacy isn't the only company rushing back onto the revived IPO scene.
On Wednesday, Xoom and uBid, two deals that had been languishing in the pipeline since last summer, set specific terms of their offerings in amended IPO filings with the Securities and Exchange Commission.
Home-page provider Xoom hopes to sell 3 million shares at $9 to $11 each, according to the SEC document. Bear Stearns and Deutsche Bank Securities are the co-managers of the deal. The company competes with GeoCities (GCTY) and Theglobe.com, whose stock made a record-setting debut last week. Theglobe.com's shares proceeded to give back portions of its immense gain daily before stanching the bleeding Thursday, when they picked up 9 15/16 to close at 42. The stock closed at 45 5/16 Friday, up 3 5/16.
UBid, the auction site subsidiary of direct marketer Creative Computers (MALL), narrowed the estimated pricing range of its 1.58 million-share offering to $13 to $14 a share.
Also on Wednesday, online content syndicator Infospace.com amended its IPO filing for the second day in a row, cutting the number of shares in its offering to 4 million from 5 million. Interestingly, the 5 million-share number was just introduced in Infospace's Tuesday filing.
So far this week, three companies have gone public. Few new deals are expected until after Thanksgiving, and the IPO market will shut down for about a month in mid-December for the holidays.
But for a couple of weeks in late November and early December, the fireworks will be something to watch, said John Fitzgibbon, editor of The IPO Reporter.
"When the wolves howl, the [bankers] will be there to feed them," he said, referring to investors as the wolves.
Both Fitzgibbon and PO Value Monitor research director Steven Tuen agreed that the poor post-hype performance of Theglobe.com and EarthWeb, which rose Thursday after three big down days, will not do much to temper enthusiasm for upcoming deals.
"Unfortunately," Tuen said, "investors see stories about companies going up eight times on their first day, and that remains in their minds, even though these stocks have fallen a lot."
By Darren Chervitz, CBS MarketWatch