Reams have been written about the beating technology stocks have been taking on Nasdaq, but much less has been said about Israeli stocks trading in Europe, mainly in Germany.
Europe's appetite for Israeli high tech has lifted the valuations of local companies to Wall Street levels, but the companies choosing to list in Europe are not of the same quality. Still, the picture in Europe's new exchanges, whether it's Frankfurt's
, looks a lot like the Nasdaq. Prices peaked in early March. The
Neuer Markt Index
reached 8,500, 2.5 times its level at the end of 1999. Not by coincidence, that period was also Nasdaq's finest hour.
Israeli stocks trading in Frankfurt rose, too, to record highs more reminiscent of Nasdaq. They wouldn't have achieved the same valuations on the
Tel Aviv Stock Exchange
, which trades under the symbol WZM as the first Israeli company to list on the Neuer Markt. It glided to a high of $14, approaching a market cap of $150 million, despite mounting losses and its failure to meet goals. It's now somewhere between $3 and $4.
Advanced Vision Technology
, VSJ in Frankfurt. Once priced by venture capitalists at $2 million, the company achieved a market valuation of $250 million, at its height. In fact, take a look at the lot:
Israeli stocks trading on Neuer Markt
Drop from peak
OTI On Track
During the first six months of 2000,
Advanced Vision Technologies
, or AVT, posted sales of $6.2 million. But its valuation is twice that of
, which recorded sales of $46 million in the first half. Yet Europe's investors value AVT at about the same level as Nur.
But the glee on Europe's exchanges evaporated in synch with the end of the party on Nasdaq, which at least had been based on something solid. The Neuer Markt Index, which as we said touched 8,500 in March, lost its gains of the past 18 months, falling to about 4,000. That's even worse than the Nasdaq's performance.
Israeli stocks could teach their American counterparts a lesson or two in diving. Plunging hand-in-hand with their German brethren, WizCom, for example, lost 75% of its value. AVT, not to be left behind, sank by 70% to a company value of $80 million.
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