Markets & Stocks
eBay auctions itself
September 21, 1998: 9:56 a.m. ET

Internet company's offering may breathe life into IPO market
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NEW YORK (CNNfn) - Wall Street's recent volatility has caused a drought in the IPO market, with no new offerings in two straight weeks, the longest such stretch in seven years.
     Not since a month-long pause between December 1990 and January 1991 has the IPO market been in such a sleepy state.
     But one IPO could breathe life back into the market as early as this week.
     This week's newcomer is eBay, a pioneer in online person-to-person trading. The highly anticipated offering is expected to price between $14 and $16, raising $55.8 million. There is solid demand chasing the tiny 3.5 million shares being floated.
     With Internet IPOs down 5 percent on average this year, the field of Web IPOs has proven to be a disappointment. This should work in eBay's favor as finicky investors, searching for the next Internet leader, may not be able to let this deal go.
     Unlike many publicly traded Internet companies, eBay is profitable. Only 19 of the top 50 publicly traded Internet companies have profits at all.
     The three-year-old service brings buyers and sellers together in an online auction, where individuals buy and sell items ranging from antiques, coins, and collectibles to computers.
     Over one million people visit eBay's site each month, and 3,000 new users and 70,000 new items are added each day.
     For the six months ended in June, eBay generated $14.9 million in sales and netted a $215,000 profit.
     With a prospective market cap of about $600 million, eBay could sport a price/earnings multiple of over 2,700.
     While that figure may seem high, having a P/E at all is seen as a positive when compared with financial problems faced by many Internet and start-up companies,
     Barring any significant plunge in the broader market, this deal may likely weather any mild storm, such as GeoCities did when it went public.
     Its stock went public during a retreat in the overall market, yet the offering was revised higher, opened with a near 78 percent premium and finished the day up 119 percent on a day the Dow Jones industrial average lost more than 100 points. Back to top
     -- by staff writer Bambi Francisco


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