Shares of popular women’s network iVillage soared 233 percent on the stock’s first day of trading on Friday, closing up 56-1/8 to 80-1/8. This climb was even more dramatic than it seemed. The initial public offering was originally priced at $12 (US$), but massive interest doubled the offering price. The stock was as high as $100 on Friday.
“There’s more than 25 million women that have access to [the Web],” Kate Delhagen, director of online retail strategies at Forrester Research, told CBS Marketwatch. “That’s the reason for the frenzy.”
iVillage already has a million members. The Web site also has promotion deals with NBC, which owns a stake of the company, and America Online, so there’s no doubt that it will continue to grow. The question now is how much this Web site can influence the buying habits of women.
iVillage includes a book club full of recommendations that might be able to challenge Oprah Winfrey’s book club dominance in the future. iVillage’s book club links to Amazon.com, one of iVillage’s many e-commerce partners.
A Diverse Shopping Channel
iVillage’s shopping channel includes links to baby products retailer iBaby.com, Music Boulevard, Continental Airlines, AT&T and numerous products targeted at families.
It’s obvious that women make many of the purchasing decisions for households, but iVillage is going to need to do more than help other companies sell things to become viable. The company has lost more than $75 million since launching in 1995.
Competition Is Strong
Hambrecht & Quist, which was an underwriter for the IPO along with Goldman Sachs, predicts iVillage will break even in 2001. But iVillage faces enormous pressure from the merger of competitors HomeArts.com and Women.com, which had a combined 3.78 million users in January according to Media Metrix, compared to 3.15 million for iVillage. The company also has to deal with a lawsuit in which the company’s former chief financial officer allegedly accuses iVillage of “inappropriate” accounting.
Despite these potential problems, iVillage’s room for growth is enormous. iVillage’s CEO, Candice Carpenter, is a former consultant at AOL, who is well-respected and known for her feistiness and savvy. There aren’t many better partners for an Internet company than AOL, and promotion on NBC, which has every reason to help iVillage succeed, could tip the scales in favor of iVillage.