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Underwriters recommending any stock they took public is a big ho-hum. TUT is projected to report its first profit in the March quarter of 2000. Even so, the eps estimate for 2000 is only a dime per share. In a super bull market for tech stocks, people are willing to look out a year or two or at most, 3 years on eps. When the shit hits the fan as it is now, the time horizon gets compressed, and investors want current earnings. As you pointed out, in this type of situation, we have no anchor with which to value the stock. Tuts was priced at $18, RAISED from an original range of $14-16. It was raised not due to fundamentals, but market psychology. With the psychology turning, $40 up from $18 in a couple weeks ain't a support level. What are they going to earn in 2001? With 100% earnings growth rate from 2000, they would only earn $.20 in 2001! (using consensus first call estimates)We have seen the left side of a mania curve. If you call any major brokerage firm with a decent underwriting presence in tech stocks and ask what their deal or IPO pipeline looks like, they will tell you it is choking with internut crap waiting to go public. Last year the supply/demand situation with internuts was out of balance. This year, the retail investor will more than get what they hoped for. As the saying goes, be careful what you wish for, you just might get it. |
