Problem is, EGRP is now in a commodity business. Since investors are no longer getting squat for IPOs, there is nothing differentiating EGRP from any other OLB. Telebanc? I get checking with Datek...why do I need EGRP and its Telebanc features? Commissions? EGRP charges more than Datek, AMTD, Suretrade, and a host of whole others.
The only way for EGRP to lure customers is to drop commissions even more and advertise even more. Gee, sure sounds like a winning business.
You said EGRP can be profitable if they stopped ads tomorrow? Maybe. But then their stock will tube even more to the single digits. Why? ERGP is in a lose-lose situation now. If they stopped ads, they run the risk of have account growth slow down, the only thing they have been pointing to as a success. If they continue with the ads, they'll lose earnings and be force to issue bonds to finance growth, reasons their stock is getting hammered now.
Your CEO just screwed the pooch when he decided to go on this unneeded media blitz. Had he stuck with bottom line earnings, the stock may not have reach the stellar highs of $72 this year, but at least it won't be a $15 stock either.
Bottomline - CC is a moron and you are paying the price for investing in a moron. |
