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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 90.07-0.1%1:21 PM EST
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To: emil who wrote (1378)8/20/1997 3:55:00 PM
From: William T. Katz   of 93625
 
Yes, I just shorted 500 shares at $80. Will probably increase my short position over the next week if it manages to hold or move up from these irrational prices. Why is it irrational?

1) This stock is trading like they are already making FY 99 revenue.
2) Even the underwriter for RMBS set this year's target in 40s. They figured the stock could be in 80s by 2000. Guess this stock is ahead of itself :)
3) The volatility at the top (e.g. 20 point drop when it was in 80s last time) show how overbought this stock gets around this area. Combine this with a relatively huge # of shares coming available 6 months after IPO and you have the makings for a dramatic fall. As a point of history, anyone who isn't familiar with it should look at NSCP's meteoric rise and then fall after IPO.
4) Reality check: This stock has cap close to $2 billion. Let's stare at that number. Yes this is a great company. Yes it has a great future. But there is no reason for this company to be trading at close to $2 billion at this time.
5) At this point, everyone is dismissing the competition. If Rambus tech doesn't make it into PCs using expected timeline, or people find SDRAM is sufficient ... <pop>

I'd be interested in hearing some long views about why this stock is fairly valued at $1.8 billion at this time ... and if so, where they think this stock will be one year from now (when their chips still aren't being used in great #s). RAMBUS starts coming alive in 1999-2000. That's 2 years away folks.

-Bill
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