<<According to your logic, then all stocks currently with negative earnings should be valued at zero!
The market is speculating Nextel will dramatically increase EPS over the next few years, and I agree.
You can either wait for EPS of $1 and pay $20-30 per share, or assume some risk and buy at a much lower price.
That's what makes it a market!>>
No, I never said all companies with negative earnings should be valued at zero...how ridiculous. All I pointed out is you said valuation was based on eps not pipe dreams and etc.....and I pointed out that it looks as though they are valuing NXTL much higher then current EPS warrants. Of course one must look into the future when investing, and pick companies they think will show nice increases in revenue....but, one must not get too ahead of itself....I'd rather buy NXTL at $25 after her numbers and market conditions show she deserves that valuation, rather then buy it at $11 and risk her heading back down to $3....Like I said, I like NXTL...I think she will survive and dominate.....I also think CSCO will survive and be one of the main players in her sector as well as a long list of others, but I still feel valuation on many of these companies are ahead of themselves...doesnt mean they dont go higher......just my opinion.....NXTL has close to 9.5 BILLION outstanding shares, with a valuation very close to 10 BILLION dollars....A) Do you think NXTL warrants such a high valuation based on current, or even projected numbers 2 or 3 years out? B) With almost 10 billion shares outstanding, how high can she go before it will be overvalued...a measly buck rise increases valuation a billion dollars....thats scary.....there are alot of companies with waaay too many outstanding shares and those companies can get overvalued very easily with just a small jump in share price.....frankly, I could handle NXTL's current valuation if share price was alot higher, but there were fewer outstanding shares.....so many outstanding shares is like an albatross around many companies necks, IMO..... |
