Three companies made smashing stock debuts on Wall Street on Wednesday, signaling a revival in investors' hunger for initial public offerings--a key source of capital for fast-growing businesses.
In the day's biggest surprise, shares of EarthWeb Inc., a New York-based provider of online services to other information technology companies, rocketed from their initial offering price of $14 to close at $48.69 on Nasdaq, for a 248% one-day gain.
That made it the second-hottest IPO ever, trailing the nearly 249% one-day gain by Broadcast.com--another Internet-related issue--when it hit the market on July 17.
Two other new stocks also were well-received on Wednesday:
* Shares of Fox Entertainment Group, the spinoff from Rupert Murdoch's News Corp., rose $2 to $24.50 in their first day of trading on the New York Stock Exchange. The company raised $2.8 billion on Tuesday by issuing 125 million shares at $22 each.
* MONY Group Inc., parent of one of the nation's oldest and largest insurance companies, gained $4.63 to $28.13 on the NYSE, after issuing 11.25 million shares at $23.50 apiece.
Despite the heavy demand for the new stocks, the stock market overall closed broadly but modestly lower. The Dow Jones industrials fell 40.16 points to 8,823.82, the third straight decline.
Amid global markets' extreme volatility in recent months, scores of companies shelved plans to go public rather than risk a poor reception--or no reception--for their shares.
But that dearth of new shares means "people are starved for good deals right now," said Randall Roth, an IPO analyst at Renaissance Capital Corp.
Indeed, Fox and MONY Group were able to raise more money than planned in part because investors looking for new stocks have had slim pickings recently.
A revival in interest in IPOs is a good sign for the U.S. economy because, without the ability to raise capital in the stock market, many promising businesses might have to shelve expansion and hiring plans.
EarthWeb's stunning debut may prove most heartening to other small companies hoping to go public--or at least to such small companies tied to the Internet.
EarthWeb provides news and information, research resources and programming software for computer programmers and developers and others who work in the information technology industry and on the Internet.
