My revenue projections for ETYS puts it at 100 MM for 1999, 200 MM for the yr 2000 and 325 MM for yr 2001. Using my revenue numbers (which is just my opinion), ETYS if at current levels in year 2002 will still be trading at a P/S ratio of 10. It will still not be profitable. ONSL is not a b2b auction exchange. It is b2c. If you don't like the ONSL example, I can give another one - VUSA (I am short that too). I am estimating that it will generate 150 MM of revenues this year. It trades at a market cap of 500 MM.
The gross margins for ETYS is higher because it has an inventory based model. ONSL does not work based on an inventory model. An inventory based business model tends to have higher gross margins which is negated by the need for higher working capital requirements and operating expenses.
As for the brand recognition point, I don't have to go far. ETYS has only around half a million members. There are dozens of sites which have more members. Victoria's Secret's website was also the hottest website for a brief period - this will not make it a multi-billion company if spun off.
IMO, e-commerce stocks trade based on demand and supply and not underlying fundamentals. They tend to be the "hottest" in the initial few months and gradually fade away. ONSL, EGGS, UBID, COOL, CDNW, BYND, etc. are not doing well. The 1999 IPOs have been priced assuming that all the companies will be successful. ABTL, AWEB, VUSA, ETYS, etc. have gone down a lot and will go lower. I believe ETYS's split of 3 for 1 (before the IPO) was meant to screw the momentum crowd. They will be in for a surprise when the lockup period is lifted (conveniently before December).
ETYS is a long-term position for me and I am unlikely to be going anywhere. As it happens to be one of several positions, I am not planning on posting a lot on the ETYS thread. I wish you and the other longs the best of luck.
Regards,
Rajiv
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