Shares of Allaire, a profitless software company that makes Web-development tools, more than doubled on Friday, its first day of trading. Investors believe there are lots of Web pages to be made and Allaire could sell a ton of software.
Shares of Allaire were priced late Thursday night at US$20. Shortly after trading began, the stock (ALLR) smoked up to $40 by late afternoon.
Allaire sold 2.5 million shares and raised $50 million from the IPO, led by underwriter Credit Suisse First Boston.
Allaire, based in Cambridge, Massachusetts, developed ColdFusion, a Web application server.
The three-year-old company has seen red ink so far. In the six-month period ended 30 June 1998, the company saw a net loss of $4.6 million. Revenues, though, have been growing. Sales between January and June 1998 grew to $8.6 million from $2.59 million in the same period the year before.
"The company is positioned at a great place," said Steven Tuen, director of research at IPO Value Monitor. "Companies continue to get on the Net. And [Allaire's] products continue to get rave reviews."
In Allaire's filings with the Securities and Exchange Commission, the company said it has experienced "substantial net losses" in each fiscal period since it started and, as of June 30, 1998, had an accumulated deficit of $14.1 million.
Another red flag: Microsoft, the world's biggest software company, gives away a bare-bones Web-development tool, called FrontPage Express, that could be considered direct competition to Allaire's HomeSite product. So far, most companies that have tried to sell products that Microsoft gives away have been crushed.
Allaire initially filed for an IPO last summer, but pulled its plans when the tech-stock market crashed in October. Allaire refiled 10 December, when the market made a stunning recovery.
Shares of Allaire closed up $23.75 at $43.75.
