Surfing the tidal wave of investors interested in anything involved with the Internet, electronic commerce pioneer Cybercash Inc. launched an initial public offering of stock last week.
Reston, Va.-based Cybercash, which develops software and systems for securing payments over the Internet, on Thursday sold 2.4 million shares priced at $17 each, raising about $34 million.
Investors quickly snapped up the stock, sending its price soaring over 65% to $28 per share on trading volume of 3.3 million by the end of trading Thursday.
Cybercash's IPO allure apparently was not dampened by the fact the firm has yet to record any revenues since its founding in 1994, and that it had net loss of $10.1 million in 1995, according to its prospectus.
Investors instead are betting on future success of the company's main software product, called Cybercash Wallet, which allows Internet users to make payments using credit and debit cards, as well as "electronic coin services" for making low-denomination transactions.
"We need to have secured electronic commerce. People are not comfortable doing Internet commerce, and this sector is very much in demand because it plays right to the fears of why businesses have not gotten involved in the Internet," said David Menlow, president of IPO Financial Network Corp., in an interview with Reuters. "Internet is not automatically a green light for big (IPO) premiums anymore, but this end of the business is."
Cybercash has forged strategic alliances with some key technology players, including Verifone Inc., Intel Corp. and Cisco Systems Inc. With the IPO complete, Verifone owns 10.1% of Cybercash's outstanding shares, Intel 5.7%, and Cisco 6.8%.