Lastminute.com confounds its critics

Lastminute.com has defied its detractors by reaching a value of almost £800m on its first day of trading yesterday.

With an opening price of 380p the share price reached a maximum of over 530p, before falling back to 475p at time of writing. This values the online travel retailer at £712m, up 25 per cent on the start of the day.

Analysts have questioned the company's stratospheric market valuation, but speaking to Silicon.com, Martha Lane-Fox, co-founder and chief operating officer of Lastminute.com, defended the company's success and said it is based on a solid foundation.

"We're being valued because of the enormous potential of the company," she said. "This is not copying a US model. This is not taking an offline business online. It's creating a new category and facilitating something that was not possible in the offline world."

However, analysts were divided on the potential of the Internet start-up. Martha Bennett, VP at analyst house Giga Information Group, said Lastminute.com is yet to prove its formula is going to succeed in the long term.

"So far I see an interesting business model and some very good PR, but I haven't seen any substance to suggest a valuation of this kind," she said. "The amount they're actually selling at the moment is minuscule."

Sarah Skinner, European Internet analyst at Durlacher Research, said companies like Lastminute.com had to look very carefully at their business model to see if it can deliver value in the long term.

However, others were more positive. Chris Setz, director of the Network
Professional Association, said Lastminute.com has been the best ebusiness idea of the millennium to date: "It shows that profit is for wimps. The business is set to expand horizontally and vertically into new markets."

Trading in conditional shares in Lastminute.com started yesterday, and will last until Tuesday 21 March when full unconditional trading will commence on the London and Nasdaq exchanges.