- guardian.co.uk, Wednesday 28 July 1999 15.27 BST
It has only been two days since the UK's first pure internet play hit the market and already some of the air has seeped out of the Freeserve bubble. More than 36m shares changed hands yesterday - more than 20% of the float - but a large number of those transactions represented a sell-off; the shares retreated 8p to 197p, almost a 4% loss. The shares were placed at 150p.
Freeserve is taking blows on two fronts; local analysts are turning increasingly negative on the firm at the same time as some of the high-flying US internet companies report weak results.
Yesterday analysts at Durlacher added their voice to the chorus of observers who believe the Freeserve model is dated. "Most subscription-free [internet service providers], including Freeserve, offer little to differentiate themselves and provide little or no barriers to exit for subscribers," wrote Nick Gibson. "As long as users can switch accounts so easily, free ISPs leave themselves vulnerable to churn."
Last week, broker WestLB issued a similarly gloomy statement and estimated fair value for the shares as 60p.
The grim outlook for Freeserve follows a disturbing set of second-quarter results from online auction house eBay late on Monday. Profits plunged by 70% to under $1m as the group more than tripled its sales, and marketing expenses, during the period. Remarkably, eBay shares were down by less than $2 late in New York trading yesterday, hovering at just over $104 a share. Nonetheless, the shares have more than halved in value since peaking at $215 in April.
Over the past two weeks, the American stock exchange internet index has fallen by 12%.
But, closer to home, investors cannot seem to get enough of the UK-based internet auction house icollector. Yesterday the shares jumped by more than 6% on the Ofex trading facility, ending the day at 660p.
The gain came as the group reported a deal with Bloomberg Business News. The plan is for icollector to offer access to its wares through the Bloomberg outlets - via Bloomberg's 100,000 computer terminals, its television network and its magazines. Many observers believe that icollector has a few other deals in the pipeline.
