Source: WSJ
Oct. 7, 1999 8:00 pm ET
LONDON -- Amid heavy trading, shares in online auctioneer QXL.com PLC flew all over the map during their initial public offering.
Shares in the two-year-old British company took off Thursday on the London Stock Exchange from an initial price of 195 pence ($3.23 or 3.02 euros), peaked at 229 pence, then slid back to 207 pence, 6.2% above the offer price. This values the company at 279 million pounds on a fully diluted basis, assuming excess shares are sold to meet demand. Shares began trading simultaneously on the Nasdaq Stock Market.
Analysts attributed the stock's volatility to uncertainty about the Internet sector and skepticism about the hype that surrounded Britain's first big Internet stock, Freeserve PLC. Traders flipping the stock dived in and out of the market for much of the day, analysts said. "A bad atmosphere has developed surrounding Internet stocks," explained Daniel Bieler, an Internet analyst with Nomura International in London. "Lots of traders tried to make a quick buck over Freeserve and some did get burned. This time around they want to avoid it." Analysts also said that investors were cautious because of the increasing number of competitors, pointing to U.S. companies eBay Inc. and Yahoo! Inc., and even Freeserve. "It's going to be an up-and-down stock," said Binoy Malde, a smaller-companies investment manager with Hill Samuel Asset Management in London. "The level of competition in the long term will become too great," he speculated. As QXL rocked and rolled, much of the global Internet sector soared, mostly in response to Yahoo!'s recent announcement of better-than-expected quarterly earnings. Other British Internet stocks benefited from the good news. Shares in Freeserve increased 8.2% to 174.5 pence, while online financial-services provider eXchange Holdings PLC rose 8.1% to 159.5 pence. On Thursday, 20.9 million QXL shares changed hands in only two hours of trading, making it the most actively traded stock outside the Financial Times 350 Index. QXL started trading in the late afternoon London time so its shares would start trading simultaneously in London and New York. By contrast, Freeserve traded 4.26 million shares for the entire day and 105 million shares on its opening day.
Shares allotted to institutional investors were split evenly between investors in the U.K., U.S. and Continental Europe, according to the company's lead underwriter Credit Suisse First Boston. Less than 5% of QXL's shares were allocated to retail investors in the U.K. QXL members who applied for the retail offer will each receive 256 shares. The company raised 54.6 million pounds before costs and expenses.