The initial public offering of Red Hat (Nasdaq: RHAT), which sells packaged versions of Linux, was a scorching success on Wednesday, and some analysts and investors think the future could be just as bright. Red Hat priced its IPO at $14, the high end of its revised range and well above the original range of $10 to $12.
As of midday trading on Thursday, the stock hit a whopping 70 1/2. The continuing gain since opening is a particularly good sign because it means a lot of investors opted not to flip the stock. Ben Holmes of ipoPros.com believes Red Hat is a solid, long-term play. Holmes gave Red Hat a buy and hold rating, the only time he has done this for an IPO.
Holmes is bullish on Red Hat largely because of its rapid growth. Another reason to like Red Hat’s long-term prospects is that the company has a dream team of investors that include Intel, IBM, Oracle, Netscape and Novell. It almost seems like there’s too much smart money behind this company for it to fail.