Wall Street has embraced shoemaker Heelys Inc. with the same gusto it had for Webvan and other dot-com detritus.
Heelys are shoes with wheels hidden in the sole allowing a wearer to either walk or skate at will (see video from YouTube). The shoes are wildly popular with children under 12. Like the kids who whiz around the mall at breakneck speeds, so did the Heelys Nasdaq debut on Friday opening 44% higher than its IPO price of $21 a share. Heelys opened at $30.30 a share on the Nasdaq stock market. The Carrolton, Texas-based company rose $11.60, or 55%, to $32.60 at close. As of midday Monday, the company has given back about $2 a share, trading around $30.60 giving it a market cap of about $828 million. The IPO helped the company raise $134.9 million.
However, Heelys is essentially a fad as the company makes only one product. As soon as children move on to the next big thing in footwear, Heelys will fall flat on its face. Of course high-profile emergency room visits thanks to a pair of Heelys could also deep-six the popularity of the shoes as parents wise-up and refuse to purchase them for their children. While Heelys probably are patented, a slightly different design could find its way into the marketplace meaning there are few barriers to entry. As a matter of fact, the successful IPO could garner interest from copycats looking to cash in on the fad.
For comparison's sake, failed online grocer Webvan had a similar IPO shooting up 66% on its Nov. 1999 debut during the height of the dot-com era. However, the online grocery business was as much a fad as the wheeled shoe. Webvan filed for Chapter 11 bankruptcy protection in July 2001, less than two years after its IPO, so don't be surprised if Heelys also falls on its face.—Matthew Wurtzel
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