Shares of Autoweb.com, the online car seller, shot up more than 180 percent in the first few hours of trading Tuesday after the company's initial public offering.
Shares of the stock were priced late Monday at US$14 each. The stock opened at $21.62 and hit $40.43 before settling back to around $28.25 by late-afternoon.
Autoweb sold 5 million shares and raised $70 million to fend off the competition.
"It's not a surprise that it's doing so well," said Steven Tuen, analyst at IPO Value Monitor.
Autoweb (AWEB), based in Santa Clara, California, pitches itself as a car-buying hub, offering new and used car listings, financing, insurance, and reviews.
Tuen said Autoweb and rival Autobytel.com get revenues from fees they charge car dealerships for customer referrals, so that there is a finite number of deals they can sign. Autobytel is also scheduled to go public this week.
"Their upside is more limited than some of the other Net companies," said Tuen. "[Autoweb's price] has gotten ahead of itself, [but] these kinds of stocks may stay at these lofty levels for a while -- they get the benefit of the doubt."
In 1998, Autoweb lost $11.5 million on revenues of $13 million, has an accumulated deficit of $17.6 million as of the end of last year, and expects to lose money at least through 2000, according to filings with the Securities and Exchange Commission.
In addition to Autobytel, Autoweb's competitors include Microsoft's CarPoint, and newspaper sites like cars.com, as well as traditional auto dealerships.
Shares of Autoweb closed up $26 at $40.
