Joe, your bear case does not add up. Bad arithmetic, again.
In your worst case scenario for IOMG:
1996 sales = $1.2B, sales growth is 135%, the market tanks, and IOMG sells for 2 X 1996 Revs.
Your arithmetic is wrong. If sales is $1.2B, sales growth is 334%, 1995 sales was $326M. It is very unlikely that any $1B company with sales growth of 334%, (even if you discount the huge, if unknown, internet and Far East market potential), is going to be selling for 2 X Revs. Be a little more realistic.
Your best case is as understated as your worst case is overstated:
1998 Sales = $5B, P/E = 15, IOMG sells for 2 X Revs therefore shares = $50.
This means, very roughly, 1996 sales = $1.6B, 1997 sales = $3.2B, and 1998 sales = $5B.
A $5B company with a trailing growth rate of 64% is very unlikely to be selling at 2 X Revs. 4 X Revs is far more likely. Even using your scenario IOMG could be selling for $100/shr (IMHO), and that is not the worst case scenario as far as the short position goes.
No one really knows whether IOMG will go up or down. That is what makes a market, but I don't really see IOMG as a great short position. With the market overall as over valued as it is, and with some stocks tremendously overvalued, can't you find a much better short positon than IOMG?
Again, good luck on your other investments.
Regards,
Mary |
