Just like that, we have another $8 billion public company: FreeMarkets (Nasdaq: FMKT). The company, which conducts business-to-business auctions, went public at $48 a share on Friday, and the stock soared more than 483 percent on its first day of trading, closing up 232 to a stunning 280.
The gain came one day after VA Linux set a record for best first-day performance with a 697.5 percent pop. FreeMarkets’ performance might actually be more impressive — its initial public offering priced at triple the top end of the original price range of $14 to $16 a share and significantly above its revised range of $40 to $42.
FreeMarkets’ stock is benefiting from investors’ fervor for business-to-business stocks. More and more investors are realizing that the overall business-to-business market is much larger than the overall business-to-consumer market, and the online business-to-business market is potentially a trillion-dollar market.
On Friday, Bear Stearns, which was not an underwriter for FreeMarkets, started coverage of the stock with a $300 buy rating.
“Thanks to FreeMarkets, companies can save 15 percent on production materials,” Bear Stearns Internet analyst Scott Ehrens said. “It is only a matter of time before clients will be pounding on FreeMarket’s door, driving torrid growth for the company.”