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U.K. Net stocks hammered
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September 21, 1999: 8:12 a.m. ET
Online auctioneer QXL.com slashes IPO price; Web stocks slump in London
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LONDON (CNNfn) - QXL.com became the latest casualty of London investors' nervous attitude to Web IPOs Tuesday, when the online auction house was forced to slash the price of its upcoming flotation.
The fledgling U.K. Internet sector is struggling as investors grow wary of the hype, and analysts suggest investor concerns could put a block on further new issues.
Freeserve, the U.K.'s largest Internet service provider, slumped 9 percent Tuesday morning in London to 132 pence after falling below its IPO price of 150 pence in the previous session.
The latest catalyst for the sell-off was a lower-than expected pricing range for the U.K.'s latest addition to its nascent high-tech sector. Internet auction house QXL.com said Tuesday its IPO would be priced in a range of 180-205 pence.
At the top end of the range, this values the company at 242 million pounds ($393 million), well short of the 700 million pound figure first indicated in July.
"Sentiment has taken a knock from the QXL.com issue price, which is more than 50 percent below the figure people were talking about in July," Emma Griffin, senior technology analyst at HSBC Securities in London, told CNNfn.com.
Griffin herself added to the selling pressures when she initiated coverage of Freeserve with a "sell" recommendation to investors.
"There is a fatigue for these kinds of IPOs. Now that people have had all the hype, they are looking more discerningly at valuations. We just can't get to some of the numbers out there," she said.
"I would not be surprised if we see more floats pulled. Talking to fund managers they don't even see any opportunity in short-term trading," she added.
The U.K.'s second major Internet IPO, eXchange, which reached the market a week after Freeserve's late July debut, has proved even more of a disappointment.
The company, which provides information to financial intermediaries, has barely seen its stock budge above its 200 pence issue price since its debut in early August. It plunged 6 percent Tuesday to 177 pence.
"Obviously it's a consequence of the weakness in Internet prices around Europe. Of 12 IPOs onto European bourses since June, all but two are trading below the price reached on the first day of trading. The average fall is 23 percent," Miles Saltiel, technology analyst at WestLB Panmure, said. 
-- from staff and wire reports
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