I think E*Trade is the most interesting of all Internet stocks at the moment. It's profitable, growing VERY fast, and helping redefine the brokerage industry. They have growing pains (slow access at times, poor customer service, etc.) just like AOL has had. I consider the online brokerage business to be in a tornado state, as defined by Geoffrey Moore in his book "Inside the Tornado." When the tornado subsides -- 3 to 6 years from now IMHO -- there will be one big winner (probably Schwab, IMHO), two chimps (E*Trade and someone else), and all the rest. If you compare the pospects of E*Trade to Amazon.com they appear similar, on the surface, but when you look closer you realize that people get accounts at brokerages and send them loads of cash to keep until invested. This quasi-captive market means that capturing customers is the key to success and that is exactly where E*Trade is focusing. Heck, they're advertising everywhere now (Monday Night Football, PC Magazine, etc.). Whereas Amazon is simply an online bookstore (although I use it and love it).
I'm long E*Trade, in case you couldn't tell, and expect to hold it indefinitely.
Eric |
