Investors Grab Fast-Moving Doubleclick Inc. Shares

DoubleClick Inc. shares rose as much as 87 percent in their first day of trading, as investors snapped up shares of the Internet advertising company.

The shares rose 11-5/8 to 28-5/8, giving New York-based DoubleClick, which had revenue of $30.6 million last year, a market value of $454 million. Earlier, the stock touched 31-3/4. Almost 5 million shares changed hands by midafternoon.

DoubleClick’s quick run-up comes as companies such as American Online Inc. and Yahoo! Inc. enjoy a boom in Internet ad revenue. Industry experts predict the Internet ad market will grow sevenfold by 2001 as online shopping becomes more popular.

“If it has anything to do with ‘E-commerce,’ it’s a buzzword at the moment,” said Steven Tuen, an analyst with the IPO Value Monitor.

Still, DoubleClick lost $8.4 million last year, from $3.2 million in 1996, its first year, even as revenue quadrupled. The company faces “a couple of big red flags,” said Jim Nail, a senior analyst with Forrester Research Inc. who predicts the stock will retreat after initial gains.

One concern is that DoubleClick’s specialty - placing banner ads on Web sites - may prove less important in the future, he said. Nail expects Web advertising to shift toward sponsored ads and newer technologies that he said DoubleClick may not be able to do profitably.

Also, the company depends on ads delivered on the AltaVista Web site for almost 45 percent of its revenue. AltaVista is a subsidiary of Digital Equipment Corp., which agreed Jan. 26 to be acquired by Compaq Computer Corp. The merger is “the sort of thing that takes time to be worked out, and while it’s there, AltaVista is stuck treading water,” Nail said.

In its filings with the Securities Exchange Commission, DoubleClick said it expects operating losses to continue “at least into 1999.” The company’s revenue grew to $30.6 million in 1997 from $6.5 million in 1996.

The company’s main product is the DoubleClick Network, a service that delivers targeted advertisements to more than 60 Web sites, including the Dilbert Zone, Macromedia, and U.S. News and World Report as well as AltaVista.

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