Barb,
I've been away from lurking short threads for a while (decided to work for a living), but even if this is to be a short lived bubble as you seem to expect, since when do these things last only one day? If memory serves, even the obvious crap around the time of Zapata ran up over a few days before collapsing. Has the time scale shortened so much since then that you'd really call a top the first day?
Also, to everyone considering selling (to close or to open), you might want to take a few minutes and understand those bothersome things we like to call "funnymentals". A few days ago, this stock was selling at a price-to-sales ratio of 0.67 in an industry with an average P/S of over 24. At $8 5/8, it is now at a P/S of 3.
Why was it so low? Simple - the few people who ever even heard of the company had long since figured that it had blown its opportunity to grab CRM market share by being first to market with a Web based product. Product delays and a complete lack of meaningful sales meant that most investors had left it for dead.
The real significance of this news has nothing to do with the size of the sale, but rather, whether it is the beginning of a shift in perceptions. Obviously, FSTW needs to follow this sale with many more, but should they do so, then that "left-for-dead" P/S ratio of 0.67 could easily become a "here's-an-up-and-coming-competitor" P/S of 10 or 20. That, combined with the rising revenues implicit in this "proving-it" scenario, could easily make this a $75 stock (a P/S of 20 on $20 million of annualized revenue would put us at $77). If current sales prospects are reassured by this sale, then those "results" could start showing very soon.
Will its potential be realized over night (if at all)? Probably not, but the upside (downside for you shorts) is so big, I can wait another year. And, with the stock so deeply discounted before today, we've only moved back into the "might-be-a-viable-competitor" valuation range. Unless they fail to follow this deal with greater results in the Q3 report, there is no reason to expect the stock to disappear again. It seems just as likely to me that it would moved sideways, perhaps in a wide range of $5-$10 (or perhaps spiking higher) given the numbers of daytraders involved now, until either they surprise on the upside in the Q2 report or we get to the Q3 report.
Simply put, the fact that it was up 360% in one day is, by itself, a meaningless statistic. If you don't know what a share price of $8 5/8 represents in fundamental terms, how can you say it's too high?
Regards,
Bob |
