Investors Betting on the Information Age
Posted July 22, 1998 7:00 a.m. EDT
RESEARCH TRIANGLE PARK — It looked like a military base in Research Triangle Park Thursday as Apache helicopters hovered in the sky and Humvees moved into the parking lot at Interactive Magic.
The software company hosted the event to celebrate its 3-D Apache Simulator game and to show off its new WarBirds.
The Triangle company was also celebrating its big move.Interactive Magicwent public on Wednesday, offering 2.6 million shares at just over $8 a share. On Thursday, the stock (IMGK) jumped to $14 dollars a share and analysts aren't surprised. (Check the latest price)
The stock market has been running "hot" with IPOs, or Initial Public Offerings. Stocks for new Internet-related companies that have gone public are soaring.
The media follows the feeding frenzy on Wall Street. New, small companies are being valued -- almost overnight -- in the billions of dollars.
So what's driving the price of these stocks out the roof? Entrepreneur Chris Evans says the excitement is driven by the move to an information economy.
"What people are seeing is that the real opportunities exist not so much your ability to build cars or to harvest grain but in your ability to take information and act as a conduit to get that information to the most number of people."
Many of these companies,Broadcast.comhave not made a profit and are considered over-valued. Still, Sonya McKay, a certified financial planner, says investors don't want to be left out.
"So I think the small investor tends to want to go for it, but the people who are the most comfortable doing it, I find, are the ones that are already there anyway in the industry."
People such as Bill Stealey, whose company went public yesterday.
"Everybody really believes the Internet is the medium for the future. I think phones are going to be on the Internet. I know entertainment is going to be on the Internet."
There are risks. All major markets plummeted Thursday. McKay warns what's current and up to date today may be gone by next week.
However, Evans believes risk takers don't want to miss out on what could be the next Microsoft.
"I think at this point what people see is that the groundwork is being laid for who are going to be the 800 pound gorillas in the next millennium."
Some analysts warn the bubble will burst in Internet-related stocks, but right now, risk-takers are willing to bet on the future of the information age.