Shares of MP3.com (Nasdaq: MPPP) went on a wild ride on their first day of trading on Wednesday, scoring a stellar gain for investors who got in at the IPO price, but also leaving other investors in a daze. MP3.com’s IPO offered 12 million shares of stock at $28, well above the original $9-11 range. The stock opened at 92-1/2, and then the wild ride really began.
MP3.com stock climbed as high as 105 and fell as low as 58-1/2 before closing at 63-5/16, a gain of more than 126 percent for the day. Of course, the stock also closed nearly 40 percent lower than its high for the day.
At its Wednesday closing price, MP3.com, which had revenue of $1.9 million in the second quarter of this year, has a staggering market value of more than $4.2 billion.
MP3.com is obviously a great brand name. However, it should be noted that the company gets most of its revenue from advertising and that there are other digital music formats from companies including Microsoft, AT&T, IBM and RealNetworks that are competing with MP3.
A $4.2 billion market cap just seems like a little much for this company. Then again, the company was worth nearly $7 billion dollars at one point Wednesday.