eToys’ Shares Quadruple in IPO
NEW YORK (AP) _ Shares of eToys more than quadrupled on their first day of trading Thursday after the Internet toy merchant raised $166 million in a much-anticipated initial public offering.
The new stock was priced at $20 a share, but soared as high as $85 in midday trading. It closed at $76.56 1/4 on the Nasdaq Stock Market.
While the IPO came amid some weakness in Internet stocks in recent weeks, the offering exceeded most expectations and signaled that Wall Street hasn’t abandoned its interest in Internet issues.
Founded in 1997, eToys has quickly become the leading toy retailer on the Internet, offering more than 9,000 toys, video games, children’s books, music and baby products. Last year, sales were $30 million, compared with $700,000 the year before.
Like many Internet merchants, the Santa Monica, Calif.-based eToys has yet to make a profit, yet it continues to attract the attention of investors.
Rival Toys R Us, the brick-and-mortar superstore which runs toysrus.com, has struggled to keep pace with eToys and is planning to revamp its Web site in the coming months to better compete.
``The toy business is one of the fastest growing online retail categories and eToys is leading the way,″ said Michael May, an analyst at the New York-based Internet research firm Jupiter Communications. ``Etoys is doing a great job building their business and capturing more wallet share from their customers.″
Jupiter predicts that online toy sales will reach $53 million in 1999 and grow to $555 million by 2002. That’s still only a fraction of the more than $21 billion in total annual toy and video game sales.
The company sold 8.32 million shares, or about an 8 percent stake. It plans to use the proceeds to expand its features and services and pay for more marketing and promotions.
Prior to the offering, demand was so strong for eToys’ shares that the Santa Monica, Calif.-based company boosted the size of the IPO by 120,000 shares and also increased the price range from $10 to $12 a share to $18 to $20 a share.
``EToys has very, very smartly managed the development of the company over the last year and positioned themselves to be the children’s center of the Internet,″ said Gail Bronson, an analyst with IPO Monitor. ``The key to a successful IPO, especially a dot.com IPO, is good marketing and branding.″