My view of the situation :
The company probably has a future far beyond the FSS hype - I wrote
about it in #21. We will be in better position to judge when we see
their annual report - in a few days. If revenue numbers meet
expectations, this can be at least $20 stock in 6-12 months.
The effect of FSS advertising is just an added volatility. It brought
lots of small non-professional investors and traders into this game.
Having received the information, they want to get in - some trust
FSS, others think it's a "pump and dump" stock but FSS hype will move
it up temporarily. Look at Monday's trading (9.29 and 10.6, after
e-mail and WWW releases) : people buy at the opening, they are eager
to get in and push the price way up. When they are all in, the price
naturally bounces down. This is not what they expected, so many
panic and sell at 5 3/4 what they just bought at 6 7/8. Good for
brokers, very good for professional day-traders who buy at 5 3/4 and
sell at 6 7/8 on the other end of these trades. The rest of the week,
in the absense of news and trading by big investors, the price drifts
on much lower volume, mostly down.
Next really big movement will probably be triggered by the release
of the company's annual report - either tomorrow or next week,
according to their investment relations department. I suspect FSS's
take on this company was largely motivated by the information they
might have on what the report will say. Don't expect profits - the
company will have to pay US startup costs. But if revenue is any
close to what is expected - we will see a big rally.
If this happens, people who did not buy before or have already sold,
but are still closely watching this stock, will hurry to buy back
and push the price even higher than it would go otherwise - making
the decline inevitable. But it will stop at higher level.
This I think is the most likely scenario for the nearest future.
Common sense advise - if you consider buying this stock, think what
downward motion of the price you can tolerate. Until the next major
move, the price will go up and down and can easily decrease by
10-15 %. If you are not willing to take such risk - don't buy. If
you buy - hold it and wait for the news (unless, of course you see
a big drop in price - say $ 3/4 - on heavy volume - say more than
1,000,000 - which would mean something really bad happend). |
