Crown Books Corp. sold 2.5 million shares of stock to the public yesterday, but the offering failed to create the same excitement as the sale of stock in Crown's sister company, Trak Auto, earlier this year.
The Crown stock was offered at $25 a share and closed after one day's trading at $24 1/4 bid, $24 3/4 asked. When Trak Auto--like Crown a spin-off from Dart Drug Corp.--first sold stock last March, it came out at $22 a share and climbed to $33 by the end of the day.
Analysts blamed the lackadaisical investor response to the Crown Books offering on changes in the psychology of the stock market and the restatement of Crown's earnings after the Securities and Exchange Commission questioned the profits the company claimed to have made.
The SEC's questions delayed the offering and in the meantime investor interest in new issues changed, said Eliot Benson, vice president and research director for Ferris & Co., the Washington brokers.
"Had the stock come out a couple of months ago, when the psychology of the market was different, the stock would have gone to a substantial premium" over its offering price, he said.
The price of Dart stock dropped by 12 points yesterday to 94, and Trak shares were also off 2 to 38 1/2.
The response to the Crown offering indicated investors "clearly discounted the company's future earnings potential," said Benson.