Net IPOs slump on first day trading

Overpriced and oversupplied

Four Internet stock IPOs -- new issues as they are known in the UK -- have failed to rise above their opening price. It was bound to happen sometime. The "failures" were 1-800-Flowers.com, BigStar Entertainment, Quotesmith.com and Splitrock Services. All fell around at least 20 per cent on the first day. So why the fall? The quality of the companies coming to market has gone down; prices are too high; it is the holiday season; and demand has been satisfied to a reasonable extent. Last week, twenty four companies came to the market and it was the busiest week for nearly two years. The average first day premium has been 56 per cent, with an average of 43 per cent increase for this year's IPOs. Typically, the price drops after the first day. In addition, e-commerce has slumped in the US recently. Online consumers dropped three percent between March and May, according to Greenfield Online. Book sales dropped 5 per cent, software 19 per cent, hardware 13 per cent, and airline tickets 10 per cent. It could be that after initial experiments, many people are reverting to their previous human-interaction methods of doing business.® See also: Daily Net finance news

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