O.C. Tech Success: Tickets.com Shares Jump 54% on Day 1
Continuing a string of successful stock offerings by Orange County technology firms, Tickets.com Inc. saw its stock jump more than 50% in first-day trading Thursday as the market valued the nascent money-losing venture at nearly $1.2 billion.
The Costa Mesa-based online supplier of sports and concert tickets and event information raised $83.8 million in Thursday’s initial public stock offering, which it will use to repay debt and for other corporate purposes.
The company’s shares were priced at $12.50, higher than the $10 to $12 range that the company had set on Wednesday, which itself was an increase over its previous range of $7 to $9.
When trading began just past 1 p.m., the stock opened at $28, climbed as high as $32 and fell through the remainder of the day. It settled at $19.25, up 54%, as 13.2 million shares traded hands. The company sold only 6.7 million shares, meaning that the equivalent of each share was bought and sold twice on Thursday.
Market analysts said it was likely that the large institutional investors that had access to the shares at the $12.50 offering price quickly sold them to retail investors.
While the company’s offering follows the pattern of sharp increases set by many other Internet firms, some analysts cautioned that Tickets.com may not be all that its suffix implies.
“This was advertised as a dot-com, but it’s not. The Internet portion of this company is really minor,” said Irv DeGraw, research director at WorldFinanceNet.com, a Sarasota, Fla.-based investment site. “The reality of it is that they are a traditional retailer with outlets and call centers. It’s not something that should be getting an Internet valuation.”
While the Internet made up only 8.3% of the company’s revenue in the 1999 third quarter, that’s nearly double the 4.2% that online sales made up in the first quarter.
In the first nine months of this year, Tickets.com lost $38.2 million on sales of $33.1 million.
The company began selling tickets online in 1997 but, like its competitors, has yet to announce plans to deliver tickets over the Internet. Tickets still have to be mailed to customers or picked up at the event location.
Tickets.com has been growing mainly through acquisitions, including eight since 1996. The company was founded in January 1995 as Entertainment Express Inc. but didn’t begin operations until a year and a half later when it acquired Hill Arts and Entertainment Systems Inc., which developed ticketing software.
The company didn’t even begin operating under its current name until it bought California Tickets.com last April.
Tickets.com faces formidable competition as well. Ticketmaster Corp. and its online partner Ticketmaster Online-CitySearch Inc. have contracts to handle ticket sales at most of the major sporting and entertainment venues in the country, and the Ticketmaster brand is nearly synonymous with event ticketing. And both companies dwarf Tickets.com. Ticketmaster had 1998 revenue of $387 million just from ticketing operations, while Ticketmaster Online-CitySearch had sales of $82.5 million in the last 12 months.
Ticketmaster Online-CitySearch also is suing Tickets.com over its practice of linking its Web site visitors to internal pages within Ticketmaster’s Web site. The lawsuit is pending.
Unlike many of the Orange County technology firms that have made big splashes in the stock market over the past two years--such as Quest Software Inc., Broadcom Corp., and Autobytel.com Inc.--the Tickets.com IPO did not make the company’s executives instant billionaires, as venture capital firms own much of the stock.
The largest investor in Tickets.com is venture capital firm General Atlantic Partners LLC in Greenwich, Conn., which holds a 15% stake.
No individual shareholder, including the officers of the company, holds more than 4.3% of Tickets.com. Chief Executive W. Thomas Gimple owns 819,444 shares, or 1.4% of the company, which were worth $15.8 million at the close of trading Thursday. He did not sell any shares in the offering.
Karen Long, a shareholder and co-founder of TicketsLive Corp., which Tickets.com acquired last April, sold 444,444 shares worth $5.5 million. She was the only “insider” to sell shares in the offering, but is no longer an officer of the company.
Tickets.com shares trade on the Nasdaq National Market under the ticker symbol TIXX. Morgan Stanley Dean Witter was the lead underwriter of the offering.
