AOL READ FOR W/E 8/1/97 :
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First some notes:
- We saw a few downgrades to end last week.
- We saw a sickening last ditch effort to "make a $$ plan" from AOL to sell subscribers soul's!
- We saw AOL smartly back away from this, but not before they ticked off their stockholders, subscribers, advertising customers, and partners (and probably their employees, especially customer service!).
- We saw a news article showing their increase in growth surpassing other providers, ranking them head and shoulders above others in the ISP QUANTITY market (quality and profit are another story).
- We did see volume drop off dramitically.
I believe we have a net "NOT SO GOOD" news indicator here. For a stock with so much shorts, the volume drop off now is very, very interesting (very interested in Jim's read). Someone said earnings release is 8/5/97, so there is the chance of a pickup in activity throughout the week to play earnings (but which way will the street play, and what will they play with?) We've got a tricky triangle topping in the tech markets (INTC can't stay above 90, SOX index having trouble with previous top, MSFT direction unknown, unfinished runs by AMAT, IBM and the like, recent decline in DELL and CPQ due to GTW earnings, etc.). All of this points to a blah, laisez-faire market, or people starting to play downside earnings where warranted.
Now AOL earnings. Do we have any guessers at what they will report. Zacks shows the following :
4th qtr (6/97) ===> .07
1997 (6/97) ===> (.28)
1998 (6/98) ===> .86
Prior qtr was .02 (first profit!!). I don't see the excitement in .07 for the last qtr, but WDIK. I'm guessing they may very well hit that number, but at these prices the street must be looking a heck of a lot higher (especially for 1998). Your toughts??
With all that said :
Monday : We see either a weird 4 point swing up and down day, or a flat day -- in any case finishing below 64.
Mid-week we decline slowly on lower than normal activity.
Mid-day Thursday the volume starts to pick-up in earnings anticipation. I think the market may very well be in the beginning stages of the start of a correction then, and the street will join on to play AOL's downside, which, if its through options, should bode well for us bears. I'm Calling AOL on Thursday touching below 61 at some point, and Friday ending on either a pretty good slide to 57 (with odd intra-day bounce on Monday) or rallying back up to only 62-3 level. Yep either 57-8 or 62-3 not in between.
This is what I see. Thanks for letting me think out loud here. |
