Probably no one expected theglobe.com -- a second-fiddle Web-site host that had failed to go public once before -- to break all records with the most successful initial public offering of all time.
But on Friday the stock shot up ninefold -- 854 percent -- in the first few minutes of its publicly traded life, making instant millionaires out of the company's 24-year-old co-founders. It also confirmed investors' appetites for Internet stocks, even with uncertain outlooks for the US economy and world financial markets in coming months, analysts said.
"I'm just flabbergasted, really," said Steven Tuen, an analyst at IPO Value Monitor. "It looks like people are just grabbing at straws at this point, and bidding stocks up without really looking at the fundamentals behind them."
Theglobe.com's (TGLO) stock was priced late Thursday night at US$9 a share. It surged to $97 shortly after trading began Friday and by late afternoon was up $61.25 at $70.25. Theglobe.com raised $27.9 million from the offering, which it will use for advertising, business operations, and acquisitions.
Analysts said it was mostly the mom-and-pop individual investors, and not institutional investors, who bought up the stock. Individuals are less likely than mutual funds to hold onto a stock for the long term.
"I would be inclined to say it's gonna fall," Tuen said. "There's way too many people speculating on this stock."
Theglobe.com tried to go public last month, but became a victim of a big slide in technology stocks and an uncertain outlook for financial markets. In its first attempt to go public, Theglobe.com lowered the price of its shares from $11 to $13 a share, then from $8 to $10, and finally delayed its plans, citing "the current volatility of the market."
But it quickly decided to take another shot at going public this week after the spectacular debut of EarthWeb. On Tuesday, stock of EarthWeb (EWBX), a publisher of newsletters on the Web, tripled on its first day of trading.
