NEW YORK (CNN/Money) -
Shares of Blue Nile Inc., a Seattle-based Internet jewelry merchant, jumped as much as 38 percent in a relatively strong debut Thursday.
The jump came after the company, which provides a build-your-own diamond ring service, had its shares priced at $20.50 a share in its initial public offering -- above the high end of its initially estimated price range of $17.50 to $19.50.
Blue Nile (NILE: up $7.59 to $28.09, Research, Estimates) shares rose near $28 in late afternoon trading on Nasdaq, after hitting a high of $28.39 earlier in the session.
Blue Nile stock made its debut at a time when market watchers weren't quite certain how confident investors feel about a new batch of initial public offerings.
It was also the first IPO in the retail sector to be priced above its estimated range since the Aeropostale (ARO: Research, Estimates) offering in May 2002, according to Thomson Financial.
"The Blue Nile gain is almost three times the average IPO first-day gain, which is about 12 or 13 percent," Richard Peterson, chief market strategist at Thomson Financial, told Reuters.
The company reported 2003 revenue of about $129 million and net income of $27 million. In the first quarter of 2004, it reported revenue of $35.8 million and net income of $1.9 million.
"Blue Nile has been profitable since 2002 and has generated positive cash flow from operations for the past three years," said an IPOHome.com report.
"While sales growth will be more moderate going forward as Amazon (AMZN: Research, Estimates) and others move into its space, it is still capable of growing more than 20 percent per year and operating leverage should continue," the report added.
The company also has the backing of well known venture capital firms, including Kleiner Perkins Caufield & Byers and Paul Allen's Vulcan Ventures.
Merrill Lynch & Co., Bear, Stearns Cos. and Thomas Weisel Partners underwrote the offering.
-- Reuters contributed to the story
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