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Can PayPal frenzy continue?
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February 16, 2002: 7:00 a.m. ET
IPO markets has tough act to follow after first-day surge for PayPal.
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NEW YORK (CNN/Money) - The surprising surge of PayPal Inc.'s shares on their first day of trading Friday may be a sign that investors are once again very hungry for new issues.
PayPal (PYPL: Research, Estimates), a payment service for online auction sites, surprised analysts by soaring nearly 55 percent on its debut, despite the recent negative news involving a lawsuit and the state concerns about its business.
But while the demand for initial public offerings may exist, very little is available in the way of supply this week, with only one new name, retailer Petco Animal Supplies Inc., on the cards.
David Menlow, president of IPOFinancial.com, said it is clear the market is in the middle of an IPO drought.
"The question is what happened today to create this mini feeding frenzy for PayPal," Menlow said. "For a stock to be up (as much as) nine points on the day is quite a statement."
Menlow said while Petco may pick up investors on the heels of PayPal's success, it will not be runaway and will pale in comparison to the payment company's jump.
San Diego-based Petco sells all ranges of pet supplies at 560 stores in 41 states and the District of Columbia.
The company had more than $1.15 billion in sales in 2001, with net income of $28.8 million.
Petco plans to raise about $275.5 million by selling 14.5 million shares between $18 and $20 per share.
Industry watcher Ben Holmes said he has not been a fan of retail deals but reconsidered looking at the 13 retail deals which came up last year, which are up an average of 22 percent, and the 10 percent first-day gain of GameStop (GME: Research, Estimates) on Thursday.
"It looks like there's some market for these retail," Holmes said. "I think the deal works really."
Pecto plans to trade as "PETC"
Newcastle, old deal
The other deal is real estate investment trust Newcastle Investment, a holdover from last week.
"Newcastle I liked; I now hate it," Holmes said. "It just looks like this thing is in trouble."
"I'm looking at the fact that we might be ahead of the curve with the real estate investment trust offerings," Menlow said.
Newcastle expects to raise about $101.2 million, selling 4.4 million shares between $22 and $24 per share through lead underwriters Bear Stearns and Lehman Bros. The company plans to trade as "NCT" on the New York Stock Exchange. 
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