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Technology Stocks : America On-Line: will it survive ...?
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To: bobby beara who wrote (4187)7/30/1997 8:43:00 AM
From: steve lipson   of 13594
 
It all depends on where you start measuring from.

Sure AOL was recently triple its 52-week low. But if you look back about 15 mos. you'll see that the stock is flat compared to the overall market's gain of about 50 percent. A classic underperformer with lots of upside on that basis. <g>

AOL is also a different company today than it was a little more than a year ago, with cleaner accounting, flat rate plans and big money marketing deals where they get hard cash from savvy players like CUC, Amazon and 1 800 FLOWERS.

Those marketing deals, in particular, changed everything. That's because they could announce a new one at any moment that might push the stock up to an entirely new plateau. That tilts the odds impossibly against any short seller/put buyer IMHO. Consider: You have to be right that AOL is due for a fall. Even if you are right, if it doesn't happen in the time frame you expect, you'll still lose money. And now, AOL can change the game at any moment by announcing some new deal that you had not factored into your thinking.

Throw in some other details like the stock's strong uptrend this year in a positive overall economic environment with low interest rates, general online growth trends -- you need a lot of rolls of the dice to all come up your way if you're expecting the stock to retreat much more than this after that sharp rise into the 70s.
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