People hoping to make a quick profit from free shares in internet community websiteThemutual.netfound that by the end of yesterday's first dealings it would actually cost them money to sell their stock.

Themutual promised new subscribers the chance to share in the company's success by giving them 1,000 shares each when it listed on the stock market. But at the end of the first day of trading on AIM yesterday the shares had slumped 50%, making each tranche of 1,000 shares worth £7.50.

Stockbrokers said that investors looking to offload their stock at this level would probably end up losing money because even cheap dealing fees are usually more than £10.

Managing director Ben Heaton said shareholders should hang on to their stock.

"We always expected the shares to react like this. Members should look forward as we build the business and hopefully turn those 1,000 shares into a nice little windfall," he said.

The shares are priced at 0.75p each, valuing the firm at £27m. Mr Heaton said the point had been to allow members to see the value of their shares.

Themutual recently raised £2.5m from four venture capital firms and Mr Heaton said it would not need to return to the market for more funds.