If one were to have projected sales/revenues/earnings growth using the same metrics you just dictated on just about every NAZ listed tech stock, in 1999/2000, NAZ would be at 15000 and YHOO would have been trading at 3000 a share..
Certainly not true, which you would know if you did the kind of analysis that I do. Almost every single high growth stock I looked at in 1999-2000 had expenses growing at a higher rate then revenues with items like sales and marketing, G&A growing at double and triple the rate. This is a great early warning sign on any growth stock. Many didn't have an earnings side and they kept pushing out earnings to an ever shrinking horizon while they accelerated negative cash flow. Even the bell weather Naz stocks had decelerating rev and earnings growth showing up a good two years before their prices peaked.
if I were to give you a estimate based on prior quarters, then EXPE would grow exponentially till it becomes the largest capitalized stock in the universe...
So you make your investments based on the future? You don't have anything else but the past....unless you are guessing based on some sort of crystal ball. Like right now you are making an assessment on past performance of like stocks. You are gambling that this stock is like the other stocks you followed, but you don't even know what the growth rate is and you don't know whether it is accelerating or slowing so you don't really know if this company is like those other companies. You are thinking it is the same animal because the PE and P/S is similar to those others who fell so far....but you don't know.
Earnings cannot continue to accelerate at the current rate
Not indefinitely, of course, eventually growth will slow but they could continue to grow at the rate they are growing for quite some time. You may want to review some history of growth stocks here. Consider that they experienced this growth in what many are calling a "travel depression".
2)Barriers to entry to this business are not unlimited and therefore much like any growth sector, it will experience heavy competition in the near future. Namely orbitz.com
Please, this is what people said about Ebay and after a zillion auction sites being started I don't see a whole lot of sites still standing, let alone any that are profitable. Capital is so free flowing right now, almost anyone could open this biz, right?
3)The stock trading at 9 times sales and 33 times next years projected earnings (minus charges of course, if one were to factor out charges the PE would jump to over 100), is priced for perfection. This is nothing but a travel agency with a $4.5 billion dollar market cap.
Maybe the only valid reason you have to sell it considering it is apparent you don't know the answers to my other questions. But this is good, because you helped me win a bet. My bet was that shorts do just as little real fundamental analysis of the companies they hold positions on as longs back in the bubble days, that they are simply hoping that the predominant trend in the market will continue. |
