Cents and Sensibility - Kimberly and Friends' Consortium Message Board

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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium

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To: Kimberly Lee who wrote (14586)	8/26/1999 11:44:00 AM
From: Andrew G.	Read Replies (1) of 108040

Clueless Pokemon investors/traders looking for which way the wind blows. This is an amusing phenomenon that resembles the surge in internet stocks valuations only on a smaller scale. What should GRIN KIDE PDSE, etc. be worth ? What would any company be worth that is generating +25% growth quarter over quarter heading into the high point of their seasonal cycle ? The difference between these toy related issues and internet stocks in general is that many are profitable (at least recently) and will continue to do well for at least another quarter. Many internet stocks are still measured by cash burn-rate, website stats (registered members, etc.) rather than revenue. That's a much harder model to measure. Regarding the Pokemon phenomenon, I would urge any real investors out there to pick up a copy of Scrye magazine at your local newstand or bookstore. There has not been a single word about Scrye that I could find in a text search of SI. This magazine is the bible of Pokemon and CCG fans. If you already know that, then you already know that Pokemon is not just a hit because kids love the cards, Nintendo games, etc, but because Pokemon has become something of a legal kiddy lottery. Some of the cards produced by Wizards of the Coast have attained enormous valuations in a short period of time. I know for a fact that many kids and adults are literally addicted to buying Pokemon cards because of the opportunity to obtain one of the rare cards that can be instantly sold to a dealer for a high premium. Pokemon is NOT like other fads in my view because lottery/gambling quality which is missing from other passing fads. Those that attain leadership in this phenomenon will generate substantial profits over the long term and it will come with higher margins and greater speed than one can expect to find in other toy products. At this juncture, I feel that the stock valuations of KIDE GRIN and others are quite low in relation to their earnings potential but the rapid acceleration of stock valuations has made for a great deal of speculative turning. Once this has settled down and the quarterly earnings start to flow in it will be increasingly apparent that the Pokemon phenomenon has injected a considerable amount of increased profits and future earnings potential that may cause an upward shift in industry PE projections for a select group of leaders.

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