Internet mania strikes Wall St

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The Independent Online
A TINY US Internet company broke all records yesterday, soaring in value tenfold during its first day of full trading on the New York Stock Exchange.

Shares in theglobe.com, a website that allows users to set up free home pages and e-mail, surged from an offer price of $9 to $97 at one stage, valuing the business at $950m.

The company, founded in 1995 by two Cornell University students, has never made a profit and, according to its Securities and Exchange Commission filing, does not expect to "for the foreseeable future". But yesterday it was the fourth most actively traded stock in New York, swept along by the investor frenzy for Internet companies.

The sensational performance of theglobe.com follows the debut earlier this week of an Internet-based information provider, EarthWeb Inc, whose shares surged more than fivefold on the first day's trading.

Commenting on this wave of buying, a Wall Street analyst, Rick Berry, said: "It is the mania of all manias."

The two founders, Todd Krizelman and Stephen Paternot, who are both in their mid-twenties, now hold stakes worth in excess of $70m.

The company chairman, Michael Egan, formerly head of a car rental company, is now worth $583m.

The success of other more established Internet companies, such as Yahoo!, America Online and Amazon.com, has drawn investors towards smaller Net providers.

Yet not all on Wall Street believe that reason is the sole driving force behind the rise of Internet stocks. One commentator believes that the market, in search of the next boom sector, is rushing blindly into Internet stocks.

"It is OK if the pure-bred dogs are showing well," he said, "but when you have the true mutts showing sharp rises, it probably means we are in for a correction."

By the market close, the shares had fallen back to $63.5, valuing the company at $620m.

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