What would it take to move ATHM from the "dead money" category?
Surprising the Street would be nice... no doubt.
They need to change group think from "I'm afraid to own this stock" to "I'm afraid not to own this stock". In lieu of a surprise, one way of doing this is to put in a series of higher highs and higher lows. Right now ATHM is churning along a long term trend that it established in its early days as an infant IPO. That trend has a positive slope, and if, over time, ATHM can hold that trend on every challenge, buyers might start stepping in. If you take the slope of that line, and assume that the share price will hold to it, you can see what a minimal rate of growth the market is pricing into this stock. Should ATHM hold this trend, more and more players will assume that this is the price correlation to fundamentals that the market is assigning. Until now, there has been no good reference point.
Nonetheless, ATHM has not yet proven its bottom. It can do so in a number of ways, one of which is the above. Another way is for it to sell down so severely that there is no question, even amongst the most under-educated analyst, that it is undervalued. At this point, I suspect this is what most money managers want to see before they buy into it. The company has given them no reason to fear missing out on a run-up... and there is still fear that management could repeat the mistakes of the past, dilute the shrs, go on a buying spree for unwanted web properties, etc., etc.
Bottom line... an inflection point must come where greed exceeds fear or complacency. Personally, my bet is on that LT trend... all else equal fundamentally. I would rather buy this stock under 20, than chase it later on.
Mike |
