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QXL.com IPO fizzles out
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October 7, 1999: 11:39 a.m. ET
Latest U.K. Net IPO surges at open but then falls back on debut in London
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LONDON (CNNfn) - U.K. online auction house QXL.com fizzled out on its debut in London after initially jumping 17 percent.
The stock leapt 34 pence at the open to 229 pence, but slipped back to stand 1.5 percent higher in mid-afternoon trade in London less than two hours after the stock started trading.
The initial public offering already was under pressure as it priced at 195 pence ($3.21), valuing the company at just a third of initial estimates.
The latest U.K. Internet play was forced to slash the price of its flotation in London and on the Nasdaq Stock Market as British investors shied away from the sector in recent months.
The offering price valued the company at 263 million pounds ($435 million), including a "greenshoe" option of 4.2 million new shares, a far cry from the 700 million pound price tag first suggested in July.
On top of the reserve stock, QXL issued 28 million new shares, raising 54.6 million pounds ($90.40 million).
The issue was more than eight times oversubscribed but this paled into insignificance to Freeserve (FRE), the U.K.'s biggest Internet provider and biggest Internet IPO to date, which was more than 30 times oversubscribed.
QXL.com's initial public offering has fallen victim to the malaise that has infected the nascent U.K. Internet sector. Investors have grown increasingly wary of Internet plays as they discard the hype and start looking at the hard numbers, or lack of them.
The release of the lower-than-expected pricing range for QXL.com two weeks ago further knocked the sector. The U.K.'s first two major Internet IPOs have struggled as a result.
The initial pricing of QXL.com knocked Freeserve below its IPO price of 150 pence. Financial services group eXchange, which debuted in early August a week after Freeserve, has struggled to trade above its 200 pence issue price.
The fortunes of the two other U.K. Internet plays Thursday were in sharp contrast to QXL. Both stocks were more than 8 percent higher with Freeserve at 174 pence and eXchange (EXC) trading at 160 pence.
QXL.com was founded in 1997, as Quixell, by journalist Tim Jackson, a columnist for the Financial Times.
The company staged Europe's first online auction in January 1998, offering computer equipment. The company now has sites in the U.K., Germany, Italy and France and is planning further expansion.
Jackson got the idea for launching the auction site while living in California in 1996. At the time he was doing research on a book called Intel Inside.
QXL.com's main competitor is e-Bay Inc. (EBAY), which acquired a German auction site in June and has set up a new U.K. site. 
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