FreeMarkets' Shares Soar in IPO
Dec. 10, 1999
PITTSBURGH (AP) _ FreeMarkets Inc. became the latest Internet company to soar in in first day of trading, rising 483 percent Friday.
The Pittsburgh-based Internet auction business offered 3.6 million shares of common stock on the Nasdaq Stock Market at an initial price of $48 a share, raising $172.8 million for the company.
Investors bid the price up to $248 a share when the market opened, and then pushed shares up to $293 before they closed at $280. About 7.8 million shares changed hands.
In a report, Bear Stearns analyst Scot Ehrens suggested FreeMarkets would be a good buy and estimated its share price could rise to $300 in a year and to $540 within three years.
``Some of these new offerings are beyond anything I've seen in the market in 30 years,'' said analyst Harry Wells, who covers the auction company eBay for Adams, Harkness and Hill Inc. in Boston.
The market action on FreeMarkets came one day after VA Linux Systems Inc. of Sunnyvale, Calif., set a first-day trading record by gaining 698 percent.
FreeMarkets conducts reverse auctions on the Internet for businesses. Companies that want to buy a product take bids from suppliers around the world. The suppliers bid the price down to win the sale.
FreeMarkets has estimated it has saved customers up to 25 percent through the reverse auctions.
The closing price gave FreeMarkets a market value of $9.5 billion.
Its client base has grown from eight in 1996 to 21 this year and includes General Motors Corp., Pepsico Inc. and United Technologies Corp.
Sales have gone from about $400,000 a year three years ago to a projected $21 million this year.
FreeMarkets, which employs 300, has lost $13.5 million for the first nine months of the year.
Officials at FreeMarkets declined to comment on the offering, citing Securities and Exchange Commission rules.