SNOWBALL MELTS BELOW IPO PRICE
Byline: Vicki M. Young
NEW YORK — So much for the hot IPO market when your firm is a consumer-focused Web site.
Initial public offerings may be bustling for some firms, but Snowball.com at the end of last week saw its shares dip below Tuesday’s share offering price. The online media site, which targets the 13-to-30 year old demographic, was priced at $11 a share and opened Tuesday at $11 1/16. It didn’t see any movement in share price until a midafternoon rally Tuesday when shares rose 36 percent to close at $15 1/4 in over-the-counter trading.
Shares of Snowball.com lost ground on Wednesday and Thursday, drifting lower to its opening price. On Friday, shares closed at $11.
Although the offering didn’t quite explode out of the starting gate, the company did raise $69 million, selling 6.25 million shares, or 17 percent of the firm. After underwriting expenses, Snowball will have $62.5 million in its war chest to fund growth. Goldman Sachs is the lead underwriter.
A Securities and Exchange Commission filing earlier this month said that on December 31, 1999, Snowball was affiliated with more than 150 Web sites, each targeting what the firm calls “Generation i,” for Internet savvy youths.
The main sites are ChickClick, targeting Gen i women, and IGN, an entertainment site for Gen i men. The ChickClick site offers links to an additional 35 sites targeting women. Also popular are InsideGuide, a student-generated site providing information on colleges, and PowerStudents, which provides college admission, job and career information.
The sites generated an aggregate of over 5.9 million unique visitors in January, with over three million registered users on January 31. Snowball said its goal was to be the preeminent network of content, community and commerce sites for Gen i.
In 1999, according to the SEC filing, the company had a $34.8 million net loss on revenue of $6.7 million, compared to 1998’s $3.7 million net loss on revenue of $3.2 million. In 1997, Snowball lost $1.3 million on revenue of just $927,000. Although the company sells some apparel at its ChickClick site, Snowball said in the filing that it gets most of its revenue from advertisers who pay for ads on the site. Most of the content is generated by its affiliates.
Snowball is the latest in a string of e-commerce IPO’s over the past 12 months, including iTurf, Alloy Online, Ashford.com, Fashionmall.com and Fogdog.com. Bolt Inc., which operates Bolt.com, a competing site targeting teens and college students, is set to go to market shortly. The company will offer 3.7 million shares, plus 555,000 shares to cover overallotments, at a price range of $10 to $12 a share, according to an SEC filing earlier this month.
San Francisco-based Snowball was founded by Imagine Media, an Internet Media firm, in January 1997. It was spun off as an independent company in January 1999, according to the prospectus for the IPO. Christopher Anderson, chairman of Snowball.com and president of Imagine Media, owns 48.2 percent of Snowball.com’s stock.