Yahoo IPO closes at $33 after $43 peak
By Rose Aguilar
April 12, 1996, 4 p.m. PT
Yahoo's much-anticipated entry to Wall Street
began with a bang this morning at $24.50
per share and hit a high of $43 before closing
Yahoo opened at about 8:45 a.m. PDT and shot up
to $43 an hour later, which equals $1
billion for the company. Ten minutes later the
stock dropped $10 to around $33, where it
largely stayed for the rest of the day as a
total of 8.5 million shares were traded.
Yahoo has been the talk on Wall Street and
Silicon Valley since it filed for the offering last
month, the most closely watch high-tech IPO
since Netscape Communications made
market history in December.
In spite of investor interest, however, some
analysts suggested waiting on the side lines.
"Give it time until the large buyers bail out,"
said Stave Harmon, investment analyst at
Mecklermedia. "It's better to wait and watch.
Don't jump on the adrenaline ride unless you
can handle the free fall."
Yahoo reported a loss of $643,000 on sales of
$1.4 million during its first ten months. Its
public offering is being managed by Goldman,
Sachs and is trading on the NASDAQ
market under the symbol YHOO.
The company late last night announced that it
would offer 2.6 million shares at $13 each.
Yahoo, one of the most popular search engines
on the Internet, expects to bring in $32.5
million from the initial public offering.
Some analysts had expected the stock to double
today but warned that it would drop just
as fast. "I'm expecting it to shoot up and then
die down within at least a week," said
Manish Shah, publisher of the IPO Maven, a New
York-based newsletter. "My
recommendation is to stay away from it as much
as possible because the outlook is not
very good considering what happened with Lycos
and Excite," he said, referring to two of
Yahoo's chief competitors.
Excite hit the market last week at $17 per
share and rose to $21.25 but ended its first day
at $20. Lycos went public two days earlier,
opening at $16 and shooting up to $29.25
before closing at $21.94.
This morning Excite and Lycos sold at $15 and
$18.50, respectively, then closed at
$14.50 and $17.
But Yahoo has a better brand name than Excite
and Lycos, which is the main reason that
so many investors are jumping to get a piece of
the popular search engine, Harmon said.
"Brand value counts no less on Wall Street than
it does on Wal-Mart," he said. "Yahoo
has the name and is just starting to build it
to be a very significant company in the future."
Yahoo also is largely supported by Softbank,
which today boosted its stake in the
company by purchasing 37.02 percent of its
shares for $108.25 million. In December,
Softbank acquired a 5 percent stake in Yahoo.
Softbank launched Yahoo Japan this
month, a Japanese-language search service that
offers about 15,000 sites.
"It makes sense for a company like Softbank to
invest in Yahoo, but I don't necessarily
think it adds that much value to the company in
terms of revenue," Shah said.
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