EBay’s Share Price More Than Doubles Since IPO

Online-auctions pioneer EBay Inc. broke the long, dismal drought in initial public offerings Thursday by tripling its share price from $18 to $53.50 in its first day of trading.

After a drop into the low $40s, the stock rebounded and finished the day at $47.38 a share, giving its 31-year-old founder, Pierre Omidyar, a stake worth nearly $275 million.

More than 8.1 million shares of the company were traded on the Nasdaq market.

Prior to EBay’s appearance, the IPO market had been dormant for nearly a month, largely because of the economic turmoil afflicting most world markets. It was the longest IPO drought since 1975, according to Securities Data Co., a New Jersey firm that tracks IPOs.

But EBay, a 3-year-old San Jose-based company that has the rare distinction among Internet ventures of turning a profit, marched into the public arena Thursday with a performance that recalled the headier days of technology stocks.

“It’s definitely good news,” said Tom Taulli, technology analyst with IPO Monitor, an online research firm. “It shows if you have a solid company, despite market conditions, you will do well. There’s still a lot of liquidity out there. The money’s there.”

EBay was founded in 1995 by Omidyar, an engineer at General Magic Inc., a mobile-communications platform company. He had previously been a developer of Claris software for Apple Computer Inc.

Omidyar’s concept was to use the Internet to bring the global market of small buyers and sellers in contact with one another.

While many companies, such as touted online bookseller Amazon.com Inc., have struggled to make money online through advertising or retail sales, EBay presented a simple formula. Using the traditional auction model, sellers could register their wares on the EBay Web site and open them to bids.

After a set period of time, the auction closes, leaving the buyer and seller to complete the exchange on their own. The system relies on a degree of trust among buyers and sellers, but Omidyar has said there have been only a few dozen complaints since the business was launched.

EBay makes its money by charging a small fee, ranging from 25 cents to $2 depending on the opening value of the product, and collecting between 1.25% and 5% of the final selling price.

The company’s homey person-to-person approach has proved to be enormously popular. And on any given day, about 700,000 items--ranging from a Clinton grand jury testimony video for $4 to a 1987 New York Giants Super Bowl championship ring for $6,000--are up for auction.

Since EBay’s creation, about 23 million items have been put up for sale among the site’s 1,086 product categories. The company has not been hugely profitable, but in a nascent market in which losing money is routine, its financial performance has been exemplary.

In the six months ended June 30, EBay’s revenue climbed to $14.9 million from $1.7 million in the same period a year earlier, although its net income fell to $215,000 from $486,000 because of increased operating costs.

* STOCKS TUMBLE

Sellers reigned amid a hedge fund bailout and impeachment worries. D4