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The bear case on all net stocks is straight forward and rests on two main points: (1) These stock are priced based on the notion that their growth rates are sustainable, which is, at best, a very risky bet, and at worst, is enough to make you laugh till your stomach hurts. (2) Net firms have bet the farm that profitability can be achieved if you blow a huge wad of cash to 'get there first' and colonize your part of cyberspace real estate -- again, a very, very dicey proposition in the long term. Given the very high and very real risks that neither of these assumptions will hold true for most, if any, of these companies, they do not deserve to be valued as if infinite growth AND eventual fat margins are a 'sure thing' -- and that is precisely how they are 'valued' now. They are what they are -- a crap shoot where the only sure winner is the house. Flip them, kick them, use them and abuse them -- I really don't care. But tell me they are great 'long term holds', or tell me that they have 10x return left in them, or that they are 'great values' -- say any of these things and I will beg for mercy to avoid hurting myself from the pain of uncontrollable laughter. |
