As a whole Internet stocks were having a rough day as the @Net index lost more than 16 points. Recent IPOs really felt the pain. Cyberian Outpost Inc. (Nasdaq:COOL) and 24/7 Media Inc. (Nasdaq:TFSM) were down 15 percent and 17 percent, respectively.
"First of all, Internets are -- with few exceptions -- risky investments," said Don Collier, an analyst at ProLytix Corp. "When you have a major correction like today, there's an strong urge to get away from stocks that have yet to prove themselves. Its a matter of reducing your exposure."
This isn't to say that more established and widely held Internet stocks are still safe. Yahoo! was off 5, or 5 percent, to 91 7/8 while AOL and Amazon.com Inc. (Nasdaq:AMZN) shed 6 1/16 and 7 1/4, respectively.
"It's not good for anyone today, from Internets to PCs to networking stocks," Collier said. "But when there's a sell-off, the little guys feel it most."
Surprisingly, some of the newer Internet stocks managed to hold up against Thursday's selling barrage.
Broadcast.com Inc. (Nasdaq:BCST) was off only 2 1/12, or 5 percent, to 51. Digital River Inc. (Nasdaq:DRIV), which had yet to fulfill its promise, was unchanged at 8 =. But both stocks could face tough sailing in future trading sessions.
"For Internet stocks a correction of 15 percent isn't enough with the speculative pricing," said Lawrence York, manager of the WWW Internet Fund. "There's no way to justify the $6 billion valuation on Amazon.com. Some of these stocks could correct 50 percent or more."
Geocities Inc. (Nasdaq:GCTY), which made a sizzling debut, was off 2 15/16, or 10 percent, to 28 5/16 after rocketing up to 51 3/8 in its first week of trading. That tremendous gain pushed its market capitalization to almost $1.5 billion. Less than a month later, its market value is down to $883 million.
"The market was asking the public investor to fund pre-IPO type companies," York said Internet stocks aren't dead, but "it will be a volatile ride."
Among other widely held Internet offerings, Excite Inc. (Nasdaq:XCIT) fell 4 7/16 to 34 15/16 after a Wall Street Journal article undressed the search engine firm for its accounting gymnastics; Infoseek Corp. (Nasdaq:SEEK) slid 2 MSPG) shed 3 15/16 to 35 and EarrthLink Networks Inc. (Nasdaq:ELNK) sank 3 3/8 to 37 > in early afternoon trading.
Larry Dignan contributed to this report.
Source: Inter@ctive Investor