I honestly believe the IPO will be a dissapointment
Well, each to their own and time will tell us who is right, however if you beleive that, you shouldnt be holding at these levels.
Lets be quite clear, we are not talking rational financial analysis here. If we were, RedHat shares would be $5 not $250, and companies like WebMethods, who I am sure have perfectly fine software, would not go from $30 to $200 on IPO day.
This is a non-rational market, where often the only thing that matters is the admittance price on the share, ie its actual price. I have been told by several otherwise seemingly rational friends that share X at say $50 is better than share Y at say $100, because $50 is cheaper than $100. I am not kidding. These are people who hold multiple thousands of dollars worth of stocks. And they are not alone, why else do companies split shares? Psychology, not finance.
In this market, psychology is a better predictor of stock prices than finance, because this has very little to do with numbers. Its all about chasing a dream, jumping on the train before it 'leaves the station', or being aware of what going on but subscribing to the 'bigger fool' theory.
Using psychology and not finance, I predict that PALM will go through 100 like a knife through butter on IPO day. I have no idea whether it will end at 50 or 200, either is equally possible. If you doubt this, look at the price of VALinux , a company that exists by selling free software, if you see what I mean. That company currently has a market cap of $5B (and it was around $15B on IPO). People will say (reasonably?!), well in that case, Palm is worth 20x that. Or evem, hmmm LNUX is $120 a share, and Palm is worth 10x that so I'll pay up to a thousand a share or so. It would be funny if you couldn't make money doing this stuff <g>
Joe |
