April 27, 2007 11:32 AM PDT
Wave-power company sinks in IPO
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Shares of Ocean Power Technologies, which makes systems that extract energy in ocean waves and convert it to electricity, are sinking after its initial public offering this week.
The company issued 5 million shares at $20 a share in a U.S. IPO Wednesday and the shares have steadily declined since. The stock is now selling at around $16.50. The $20 share price was also at the low end of the range: the company said it planned to price its shares at $20 to $22.
Analysts, investors and industry executives have debated for months whether the clean-tech market has reached a bubble-type frenzy. The history of IPOs indicates that investors are approaching the market somewhat cautiously. If anything, the world isn't yet seeing a repeat of the Internet boom.
Some companies, such as First Solar and SunPower, have seen their stock skyrocket since their IPOs. These companies, however, have experienced rising sales and net income. Yesterday, SunPower exceeded analysts' estimate for the first quarter and said prices for solar panels and cells rose three percent from the previous three months.
Meanwhile, stocks of ethanol providers have sunk as the price of corn has risen. Last year, VeraSun Energy issued stock in an IPO at $23 a share. It shot up to $30 and now hovers around $20.
Ocean Power's chief product is the PowerBuoy, a device that bobs along the waves. The up and down motion of the device is converted to electrical energy. A field of PowerBuoys capable of churning out 10 megawatts of electricity, about enough power for 2,500 or more homes, would occupy only about 30 acres of ocean space, according to the company.
Generating electricity from waves produces no pollution and can be installed in an ecologically friendly way. The company has made small-scale demonstrations of its technology.
Skeptics, however, have cautioned that systems trying to extract wave or tide power will always be subject to the wild and destructive nature of the sea. These projects also require large capital expenditures and extensive planning.
Still, other companies are trying. Ocean Power Delivery, which makes a sea-monster-like device for harnessing wave power, is currently conducting trials with its technology.