Internet IPO Price Behaviour

Abstract

The high number and different types of Initial Public Offerings (IPO) brought forward during the last decade makes it difficult for the investor to analyze this market. The wide array of IPOs requires that each subgroup be isolated for analysis. For purposes of this
research, only Internet IPOs were examined. Within this category alone, there are eleven sub ­ classifications of Internet sectors. Using all eleven sectors, a total of 377 Internet companies covering the period 1/1/92 through 5/2/00 were analyzed. The study focused on three factors: capitalization, change since IPO offering price, and change from first day closing price. An examination of the fifty "best"  companies based on each of these three factors indicate that, with the exception of two or three companies, significant differences among the three groups of fifty exist. Preliminary findings indicate that the expectation of high returns may not be dependent upon the three factors cited above