QXL hit by European Internet stock downturn

UK based online auction house QXL.com confirmed on Tuesday that a downturn in the valuation of European Internet stocks meant it would come to market well below analysts’ forecasts.

The company said it would issue shares representing a quarter of its enlarged capital at between 180-205 pence, valuing it at a total of about £212 million. This is well below the £1 billion figure that was first mooted when QXL confirmed its flotation.

The firm plans to use the money raised from its Initial Public Offering (IPO) to increase branding and publicity and fund expansion.

But City brokers said they were not surprised by QXL's cautious entry onto the markets.

Miles Saltiel, a technology analyst at WestLB Panmure, said: "Internet prices have been falling all over Europe. Of 12 IPOs onto European bourses since June, all but two are trading below the price reached on the first day of trading. The average fall is 23 per cent".

QXL's exact share price will be announced on 7 October, and conditional dealings on the London Stock Exchange and the US's Nasdaq will begin the same day. About 150,000 private investors are expected to have registered for the company's shares.

The downturn in Internet stocks was also reflected in Freeserve's share price on Tuesday, which fell below its 150 pence July launch price to 131 pence.

But the lack of certainty regarding Internet stocks comes at a bad time for other European companies looking to float over the coming months such as Lastminute.com and Buy.co.uk.