Hats off to Dixons and its serried ranks of financial advisors for getting away (with) the Freeserve IPO. Shares catapulted nearly 50 per cent on the first day of trading, valuing Freeserve at an astonishing £2.2 billion. Astonishing because Freeserve turns over much less than £10 million and loses money, its customers don't spend very much time staying on its Web site, and prospects for overseas growth are somewhat limited because competitors are copying its business model in other European countries. Also astonishing because Freeserve's placing price of 150p was already at the high end of the pre-float spread indicated by Dixons. The electricals retailer could charge this because the offer for 20 per cent of Freeserve shares was oversubscribed by more than 30 times. Therein lies the key for the first day madness. Freeserve is now Europe's biggest pureplay Internet stock, and it has got investors -- institutional and retail -- excited. The scarcity value of Freeserve stock has ensured a wildly successful float, as we predicted, oh, weeks ago. All the company has to do now is justify its share-price. And that means buying wisely. ®