Many Net Stocks Dip Below IPO Price

How bad is it getting for Internet stocks?

Shares of at least seven Net companies have fallen beneath their initial offering prices, as investors turn more choosy amid a slew of new stock sales.

Many of the stocks that have fallen are lesser-known companies targeting niche markets, including Alloy Online Inc., which runs Web sites for children, and MapQuest.com Inc., which provides street maps online.

Web-related initial stock sales have come to outstrip demand among investors, analysts said. Sixty-six Internet companies have gone public this year, according to research firm Commscan.

Investors are less willing to roll the dice on immature firms, many of which admit they won’t earn a profit any time soon, analysts said.

Santa Monica-based Launch Media Inc., which runs a site about music, is another recent Internet offering trading beneath its initial price. Launch fell 13 cents to $16.50 on Tuesday after first selling shares for $22 on April 23, almost double its initial price range of $12 to $14.

“There’s been such an increase in the number of deals from the Internet sector that it seemed like this was bound to happen eventually,” said Paul Bard, an analyst with Renaissance Capital Corp.

Other Internet stocks trading below their initial prices include NetObjects Inc., a maker of software used to create Web sites, which fell $1 to $7, after selling shares for $12 on May 7. Service provider OneMain.com Inc. fell 81 cents to $19.25, after selling shares for $22 on March 25. Advertising firm Flycast Communications Corp. slipped $1 to $24, after selling shares for $25 on May 4.

Market researcher @Plan Inc. dropped 69 cents to $12.63 after selling shares for $14 on May 21. MapQuest fell $1.69 to $14.69 after selling shares for $15 on May 4. And Alloy Online was unchanged at $13.25 after selling shares for $15 on May 14.