Awesome write up! Sounds like the meeting went very well.
Your paragraph here is quite alarming!
Oh yeah, tell those nitwits at Forbes and Morgan Stanley that they have $270 million in cash or about $6.50 a share if my math is right. Which makes that $10 price target about as funny as some of Mary Meeker's recent advice. OK, I know she did not write that but that analyst did not even take a quick look at the company.
What can be done about this? A couple days ago a broker contacted me saying, "Did you see the article in Forbes? They say Go2Net is only worth $10" ... this just burns me up. And the content of the Forbes article is originating from Morgan Stanley (who many people trust, right?). Don't the analysts at Morgan Stanley have any obligation to do research? And Forbes is doing lousy reporting on a number of fronts... is Forbes not making an effort to be the high quality magazine it used to be?
As you have stated, the analyst at Morgan Stanley, Lorraine Wang, must not have done ANY research but it doesn't matter... she can still spread a lot of crap analysis around the Media. How does Go2Net collect damages?
And Maybe Lorraine Wang did do her research and has ulterior motives for speaking badly (and very unrealistically) about Go2Net. She is either trying to drastically and unfairly manipulate Go2Net's stock price or she is extremely neglegent or both. Where is the SEC? This is an example of Wall Street corruption/irresponsibility/manipulation. It really sucks.
A quote from Lorraine Wang/Forbes article:
"So what's overvalued? Go2Net, a portal site, has $15 million in recent sales, a $70 price and a market value of $1.8 billion. Wang thinks the share price ought to be under $10."
First of all, Go2Net's market cap is not $1.8 billion... including all fully diluted shares, Go2Net's market cap is closer to $2.9 billion. To account for this market cap difference, should Wang's "under $10" price target be adjusted down to "under $6"?
"Under $10" per share says Go2Net should be valued at less than $430 million (actually $260 million since the article states that Go2Net's market cap is $1.8 billion at a price of $70 per share). Meanwhile, Go2Net has approximately $270 million in cash.
Many Internet companies which only have a fraction of the operation and cash that Go2Net has are selling for many multiples of a $430 million market cap. For example, Goto.com (a search engine site only and losing lots of money) is selling for a $2.25 billion market cap. Goto.com is not mentioned in the Forbes article as being overvalued.
A list of companies in the Forbes/Lorraine Wang article that are considered overvalued.
CNET
Go2Net
Inktomi
RealNetworks
Yahoo
just looking at the overvalued list...
is Go2Net at a $2.9 billion valuation overvalued relative to Yahoo which has a $55 billion valuation (including Broadcast.com)?
To summarize: The Forbes article says Go2Net is selling for $70 but a Morgan Stanley analyst, Lorraine Wang, thinks Go2Net is worth less than $10... I would like to see her justification for this. Realistically, all we are left with is a sound byte floating around the investment community (for who knows how long) that Go2Net is "worth less than $10."
Lorraine Wang (if she really did make the "under $10" comment to the Forbes reporter) better be looking for another job... a non Wall Street job. |
