Overstock.com Latest ‘Open-Auction’ IPO
Investment banker W.R. Hambrecht & Co. brought the latest initial public stock offering to market Wednesday, in another test of the bank’s controversial “open-auction” IPO system.
Overstock.com, a Salt Lake City firm that sells discounted electronics, sportswear and other products over the Internet, raised $39 million by selling three million shares at $13 each. The stock (ticker symbol: OSTK) will begin trading today on Nasdaq.
Hambrecht’s OpenIPO system is designed to allow companies to sell their shares at the best price the market is demanding. By contrast, most IPOs are priced by underwriters below what the market might be willing to pay, experts say. The latter system is designed to give stocks a boost once they begin trading, if investors who couldn’t get the deal bid aggressively in the market.
Hambrecht has marketed its auction system as the best way for companies to raise the maximum amount of capital in IPOs. Investors have been warned by the firm that they shouldn’t expect a first-day “pop” in Hambrecht IPOs, because system is supposed to work against that.
OpenIPO hasn’t been widely embraced in the market: Overstock.com is Hambrecht’s seventh deal since 1999.
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W.R. Hambrecht’s IPOs
Here’s a look at the first six companies W.R. Hambrecht brought public through its “open-auction” stock sale system.
Ticker IPO Last
Date Company symbol price price
May 2001 Briazz BRZZ $8.00 $1.39
Jan. 2001 Peet’s Coffee PEET 8.00 15.85
May 2000 Nogatech NGTC 12.00 7.38*
Dec. 1999 Andover.net ANDN 18.00 15.88*
June 1999 Salon.com SALN 10.50 0.10
April 1999 Ravenswood RVWD 10.50 29.48*
* These companies have been acquired. Prices quoted were the last trading prices before the mergers were completed.
Source: W.R. Hambrecht, Bloomberg News
