Shares of money-losing Amazon.com Inc. surged on their first day of trading Thursday as investors bet that the online retailer can maintain its early lead in the growing business of selling books over the Internet.
Amazon.com stock jumped $5.50 to close at $23.50, a gain of 31% over the $18 price set on Wednesday in its $54-million initial public offering. The stock was among the most actively traded on Nasdaq on Thursday, with 6 million shares changing hands.
Though it remains unprofitable, Amazon.com has been one of the more successful ventures to set up shop on the Internet. The 2-year-old company, a mail-order operation based in Seattle, publishes a catalog of several million book titles on the Internet and online services.
It reported a first-quarter loss of about $3 million, but sales are growing. Revenue for the period was $16 million, outstripping the $15.7 million in sales for all of 1996.
At Thursday's prices, investors valued the company at about $560 million. If underwriters exercise an option to buy an additional 450,000 shares, Amazon.com will have nearly $58 million in fresh funding after fees.
Investors are betting that name recognition among Net users will give Amazon.com an edge over brick-and-mortar booksellers that are just entering the online world.
"It has great revenue growth and a great name," said Kathleen Smith, portfolio manager at Renaissance Capital, an investment firm specializing in IPOs. "Investors seem to feel that the story is strong enough that they can wait for earnings."