smear c: I agree that all expectations are relative. During the bubble companies not making a profit were valued at 30-50 times their future sales. At its high point NETP was about 20 x. Future sales expectations have increased since then but the NETP price has dropped back. The PEG measure seems to have become irrelevant for the time being. This shows that discussions about value are theoretical in the short-term - at the end of the day it depends on what people are prepared to pay on any given day or in any given month or quarter.
When the price of a sector or of a stock like NETP's drops far below the value which it "ought" to have then one should examine it to see if the market has some profound insight not obvious to longs.
In my view, the sector will be out of favour until October-January. NETP has failed to earn itself special consideration in its sector or even to maintain the differential it had before with comparable stocks. I have said before that I put this down to PR, in the broad sense, a failure to be clear, and compelling and to inform on a consistent basis. But the bulk of it is due to sector and market depression following the collapse in value of e-commerce and e-marketing stocks.
The whole point of having ways of measuring value is that they guide you through the peaks and valleys. They tell you when a stock is over-valued and under-valued relative to averages achieved in the past.
By every conceivable measure, NETP is under-valued. There is no threat to its competitive position, or its market, or its solvency. Even if it does not achieve the hyper-rates of sequental growth it has consistently achieved, it can still meet the analysts expectations for revenues. The extraordinary technical burden on its share price was the KD1 acquisition and the SPO which added 4.3 million new shares, as well as shares issued for options. This has diluted the value of the shares. The persistent selling by the VC's is another factor, but over-estimated by a lot of posters, in my view. Vulcan Ventures is probably bent on selling the 800,000 it still had two weeks ago. My guess is that LDP will not want to sell its 2+ million until the price is a lot higher - but it is a threat.
Obviously, the "market" believes that NETP's share price is vulnerable and not worth a short-term bet. This is the third time we have hit $10 (and maybe $9). It may be the triple-bottom the TA people look for. Last year about this time, it went from $9 3/4 to $15 fairly quickly and sometiem after started its run that took it up 600% from its low in about 4 months.
My earlier post assumed that with the market working at top strength, with the summer doldrums gone, interest rate fears put to rest, and the US looking ahead to the 4Q and 2001, and assuming that NETP performs well in 3Q and gets new coverage by analysts, then recovery to $25 should be expected.
Put it another way - if it is not expected to recover to $25 in the Fall by institutions - and I was referring to them in my post - then why have 77 of them bought and held NETP some of them buying its SPO a few months ago at $45 and others having bought in its rise from $35-66? Institutions were also buying heavily two weeks ago in the $15-19 range. |
