OpenTable soars, best IPO debut in 18 months

By Phil Wahba

NEW YORK (Reuters) - Shares of OpenTable Inc (OPEN.O) closed their first trading session up 59 percent on Thursday following the restaurant reservation company's initial public offering, in the best first day performance for a U.S. company in over 18 months.

The stock ended up $11.89 at $31.85 on Nasdaq, a day after the company raised a more-than-expected $60 million in its IPO. The gains were in contrast to the 1.89 percent decline of the wider Nasdaq Composite Index .IXIC.

The stock started trading at a 22.5 percent premium over the $20 IPO price, which was above the expected range, reaching an intraday high of $35.50.

"It's such a small deal and people are interested in the brand name, plus it's the first real VC (venture capital)-backed IPO by a Silicon Valley firm in a while," said Nick Einhorn, an analyst with Connecticut-based Renaissance Capital.

OpenTable sold a modest 3 million shares, something Einhorn said will make the stock more volatile and could explain its strong debut.

The stock's run-up had many analysts scratching their heads and saying it may be ridiculously overvalued, with a high risk of a big pullback.

The company only earned 2 cents per share in the quarter ended March 31, 2009, and lost 10 cents per share in 2008. If it continues to earn at the pace it achieved in the first quarter, the price-to-earnings ratio for 2009 would be around 420 at current prices.

That compares with a prospective price-to-earnings ratio for 2009 of 47 at WebMD Health (WBMD.O).