Here's my 2 cents worth,
1. It is not fair to blame the media alone. Sure the media played a big role, but the media has done the same thing to many stocks, few get battered so badly. Evan company like CLD that altimately went to Chapter 11 fall in more orderly fasion. The reason why PRST get hit so hard is, I believe, it was way ahead of itself.
2. Does Presstek qualifies as "the next Xerox"? I don't think so. Xerography has merit of making copying possible in every office. Xerography is a completely new technology that replaces a drastic different thing, namely, carbon papers. Presstek's technology, no matter how good it is, is not revolutionary, but is evolutionary.
3. That's why at the peak price (according to Thomas J), Presstek worth about 6 billion, while Xerox worth 18 billion right now. In fact Xerox (former) management stinks, Xerox could have worth 70 billion if it could capture 50% world Xerography market (This includes laser printers).
4. One thing Thomas J left out is possible dilute of the shares. It is very likely Presstek will need to make more stock offering for working capital or acquisiton. And management will always issue a lot of stock options. A 20-50 % dilute in 5 years is not unreasonable.
5. The management, neverthless, is selling their stocks continously. It's the only way to cash in their stock by selling slowly as trying to dump together will surely cause a panic in the market. They can get more by selling 10% at $200 than selling 100% at $10. It's the same reason that the apple farmers in Europe distroy mountains of apple.
6. Even if the management do believe in the company, it still exist the possiblity they are blind folded by their enthusiam in their little baby. Everyone believes his own child is most beautiful.
7. Why I say PRST was ahead of itself? The peak price according to Thomas J will be around 450 in five years. It's 225% gain in five years, hardly qualifies as gain of decade.
8. PRST probably does qualifies as a stock of decade, it already gained 50% of the decade worth in the first 1/4 decade.
9. So in my opinion, PRST is fairly valued at 100 now, and was grossly overvalued at 200. The very short term momentum is at the long side right now, especially if people believe the 109 - 95 gap will be filled. But do not expect PRST to reach 200 soon.
10. If it ever reaches 200, and the momentum push it past 250 within a year, the odds is in the short side. |
