VA Linux Systems Inc on Thursday set a new record for the highest percentage gain of any US stock on its first day of trading, soaring 733% to close at $250. The Sunnyvale, California-based vendor of Linux hardware systems sold 4.4 million shares of common stock at $30 per share, after upping the price twice from its initial prospectus, which had the stock going for as little as $11.
The shares, which are trading on the Nasdaq under the ticker LNUX opened at an amazing $299, traded as high as $320 and never dipped below $233. VA Linux Systems overtook web portal theglobe.com – which rose 606% in its maiden session in November 1998 – as the top first-day gainer in US markets. Total volume for the day was 7.7 million shares.
Thursday’s closing price gives the 153-employee company a staggering market value of $9.93bn – considerably larger than software maker Novell’s current market cap of $7.1bn or National Semiconductor’s $8.7bn – and more than half that of Apple’s $16.93bn market cap. Even so, VA Linux trails Linux software and services house Red Hat Inc, which is currently worth $19.7bn.
Despite its current worth on paper, VA Linux reported a net loss for fiscal 1999, ended July 31, of $14.5m on revenue of $17.7m. For the first quarter ended October 31, net loss was $10.1m on revenue of $14.8m.
All of the shares in the IPO, which represented an 11% stake, were sold by the company. Credit Suisse First Boston acted as lead manager of the offering, with Deutsche Banc Alex Brown, Hambrecht & Quist and Lehman Brothers as co-managers. The underwriters have a 30-day option to purchase up to 660,000 additional shares to cover over-allotments.
