| E-Commerce Stocks: Bid.com |
Dateline: 3/31/99
While the companies we considered Monday in our introduction to Canadian Internet stocks were large media corporations with an Internet presence, not pure Internet plays, the E-Commerce field is different. The companies in this area are pure plays, with the attendant volatility, higher valuations, and potential risk that this represents. A pure play is a company that derives at least 51% of its revenues from Internet related activities.
There are two such Canadian companies that have made a name for themselves in E-Commerce. One of them, Bid.com, is often the most heavily traded stock on the Toronto Stock Exchange. The other, Uniglobe, is widely regarded as a pioneer in the online travel agency business. We'll take a look at Bid.com today and Uniglobe tomorrow.
What a wild ride Bid.com has been on the last week and a half! On Friday, March 19, the stock closed at $6.45. A week later it had doubled to $13.90 after reaching an intraday high of $17.60 on Friday. On Monday it closed at $15.50, then declined a bit to $ 14.80 yesterday. What's moving this stock is its imminent listing on the American NASDAQ exchange. That and rumours of a possible takeover by American auction giant eBay. This rumour originated on a chat board and has no apparent basis in fact.
So popular is the stock that it was the most actively traded last week on the Toronto Stock Exchange, and last Thursday there was a 30 minute period during which there were no sellers. So what does this company do?
Bid.com is an online auctioneer with proprietary software. One of its key features is a Dutch auction for which it received patent approval in the U.S. yesterday.
"The issuance of this patent is a resounding endorsement of our proprietary technology," says Paul Godin, Bid.Com’s CEO and Chairman. "The use of real time declining price auctions is a major differentiator and is anticipated to evolve as a significant sector within the online auction marketplace. It will provide a competitive advantage as we continue to build our auction business on a global scale."
And global scale is right. The website caters to American as well as Canadian users. It maintains offices in Tampa, Florida as well as in Toronto. Additionally it has forged strategic alliances with America Online, The Toronto Star Newspapers Limited, and Rogers Media Inc., and enjoys distribution agreements with Yahoo!, Netscape, Metacrawler, and Ziff-Davis's ComputerShopper.com.
In December the company signed an exclusive three year agreement for the worldwide electronic distribution of audio trading cards using Micra SoundCards technology. In February it announced it would be marketing Upper Deck's Michael Jordan card which uses the technology.
The card features a picture of Jordan's game-winning shot in the sixth game of the 1998 NBA finals against Utah, but it also includes an embedded audio track of sportscaster Bob Costas calling the play-by-play. These unique Audio Trading Cards are bound to become much sought after collector's items. Micra Soundcards, incidentally, is also a Canadian company.
Bid.com has been a favorite stock pick of Bidding on Bay Street's Laurel de Yturralde since August 1997 when it was called Internet Liquidators and traded on the Canadian Dealing Network. It was selling at $0.95 at the time and stayed at that level, more or less, even after moving to the TSE.
After reaching an all-time low of $0.56 in October the stock took off and, despite occasional reversals, hasn't looked back since. It's gained 284% from Jan. 1 to March 26 and a whopping 2382% from its October low. By comparison, Amazon.com has only gained 1316% from Jan. 7, 1998 to March 11, 1999. Many think Bid.com is still undervalued by comparison with its American cousin eBay and expect a further price surge upon NASDAQ listing.
Bid.com has some unique features that set it apart from competitors like eBay. First and foremost is its proprietary software. It leaves plenty of room for licensing agreements and business to business dealings as well as online auctioneering. Secondly is its Dutch auction feature. And thirdly is its exclusive arrangement with Micra SoundCards.
Bid.com has strong forward looking management and a great future. Unlike most Internet companies, it is already producing a gross profit though it is showing a net loss. Look for even bigger and better things after its NASDAQ listing.
Bid.com Update - Laurel de Yturralde's archive of her articles on Bid.com is the most thorough collection of information and company history available.
PC Week's Top Ten E-Commerce Sites - even in January 1997 when it was still Internet Liquidators, Bid.com was listed as a top ten e-commerce site by PC Week.
Under the Hammer - feature article on Bid.com from the Oct. 9, 1998 issue of Canadian Business.
Bid Hello to Online Auctions for Resellers - feature article on Bid.com from Computer Reseller News Canada.
Silicon Investor Bid.com Discussion
Disclaimer: As with all my columns here, I should re-iterate a precaution. I am not a professional financial advisor. I am a financial journalist and editorialist. The views in these columns are my personal opinions. The author owns shares of Bid.com.
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