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Shares of online auctioneer eBay tripled on the first day of trading Thursday, becoming the second-hottest new issue of the year and offering evidence that investors still demand technology initial public offerings.
EBay (EBAY) shares were priced at US$18 on Wednesday night, but surged to $54.25 soon after the markets opened. The stocks closed at $47.37. At its height, eBay was worth about $2 billion.
Investors have been watching eBay's IPO closely. The online auction house -- through which shoppers can buy everything from velvet Elvis paintings to genuine antiques -- is one of the few Internet companies turning a profit.
More important, a successful eBay IPO -- the first in four weeks -- would signal that investors still demand tech issues, even in choppy markets. The dates of several IPOs, including Healtheon, a health-care software company, have been pushed back in recent weeks amid the turmoil.
"I don't think it will single-handedly turn around the IPO market, but it's good news for other Internet companies that have filed but not yet priced," said Ken Fleming, an analyst at Renaissance Capital.
EBay sold 3.5 million shares at $18. The IPO raised $63 million for eBay, which plans to use the money to expand its operations and boost marketing efforts to solidify its brand. Founder Pierre Omidyar, who owns 14.7 million shares, would be worth $696.3 million on paper.
EBay runs one of the most-visited auction sites on the Internet. About 1 million shoppers have sold or browsed through 600,000 items on the site. In 1997, eBay made $874,000 on revenue of $5.74 million.
But eBay's stellar offering doesn't mean other Net IPOs will fare as well, said analysts.
"Institutional investors are going to be a lot more wary of where they put their dollars," Paul Cook, manager at the Munder Fund, which invests in Internet stocks. "The low-hanging fruit isn't out there any more. You have to do your homework. We were on the fence about eBay for a long time."
