But to be short yet unaware of the risk that they may succeed?
I think DDIM's stock price already has its success built into it. If DDIM doesn't succeed, it is very overpriced. If it has modest success, then I still think it is overvalued. Only if it is wildly successful do I see a risk in being short - but even then some stocks that have large price rises on expectations of future success end up going down when they finally realize their success. Of course there is also a risk to being short from the momentum and short term moves of the stock, but this is also a risk of being long. My feeling is that the bigger risk here is in being long. It is very unlikely that DDIM will be able to grow its consulting business more than 100%/year, because it will be very hard to hire and train new consultants. Plus I think the job market for DDIM's current employees will be very tight, so DDIM will probably have to give out raises or other incentives for its current employees to stay there. That means that Ardes2K has to be very, very successful in order for DDIM to meet expectations. We know that Ardes2K costs about $3000 if you buy it from DDIM, but how much will DDIM get if you buy Ardes2K through Unisys? I'm sure Unisys gets a discounted price, and I think I read somewhere that Unisys will get a large discount, probably more than 50%. If this is true, then suddenly DDIM needs to sell twice as many Ardes2K licenses in order to meet expectations. And if Unisys is getting a discount > 50%, then that puts DDIM even farther in the hole. If anyone has any hard data on what kind of discount Unisys is getting on its sales of Ardes2K, I would appreciate hearing about it. |
