Here are the returns for each company since their IPO's.
America Online = 48,697% (1992 IPO)
AOL is such a great story. Just to consider some of the very convincing negative arguments hurled against it over the years:
- Compuserve got there first, it's bigger and better
- Prodigy has the backing of computer great IBM and retail great Sears and are in a much better position
- the service stinks, busy signals, outages, dropped sessions, etc. (users considering a Peter Lynch idea of investing may have been compelled not to buy it, but to short it)
- free ISP's will kill them
- fast services like @Home will eat their lunch (I had a conversation with a Wall St. type a couple years ago who smiled and shook his head when noting that there were some people so naive that they still invested in AOL)
- they are "training wheels" for the Internet and users will soon outgrow them. (In a recent column John Dvorak stated that for a great many users, AOL IS the Internet. Sure they have heard about some vast ocean/wild west/red light district out there, but they want no part of it, thank you very much!)
AOL's stock chart reflects this recurring negativity, with some dramatic drops, but then, often, even greater recoveries.
Quite an interesting Case study. Makes one wonder about other great companies with lots of naysayers.
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