Shares of Internet service provider FlashNet Communications more than doubled on the first day of trading, reaffirming investors' demand for Net-related stocks.
FlashNet, an ISP based in Fort Worth, Texas, sold 3 million shares in its initial public offering and raised US$51 million. Its shares (FLAS), initially priced at $17, opened at $40.50, and hit a high of $46 by early afternoon.
FlashNet's lead underwriter was BancBoston Robertson Stephens.
The IPO's success is no big surprise. Just look at Prodigy's successful IPO, said Ken Fleming, analyst at Renaissance Capital's IPO fund. "In particular, Internet service providers have done very well" on the market. FlashNet, a national ISP, "is a real business," he said. "They have 180,000 customers."
The company has a presence in 450 cities, and also offers high-speed dedicated and broadband Internet access services. It has partnerships with PSINet (PSIX) and Level 3 Communications (LVLT). FlashNet will spend the IPO proceeds on sales and marketing operations, paying off debt, and expanding the company's network infrastructure.
FlashNet had a loss of $13 million last year on revenues of $27 million, has an accumulated deficit of about $31 million, and expects to continue to lose money in the foreseeable future, according to filings with the Securities and Exchange Commission.
FlashNet has a co-branding agreement with Lycos, which is in the process of purchasing the parent company of Wired News.
