America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Brent D. Beal who wrote (5101)	10/18/1997 2:45:00 PM
From: MW	of 13594

Brent you have made many intelligent arguments concerning aol's value and ultimately you might be right. I have friends who were bearish on the market since 2000 and at some point the market will go down and they will be right then too. I think you are playing with fire shorting this co and the question will be how much money you lose on the way up against what you make coming down.I don't see this stock coming back to the 40 level in the future.Unlike the other examples you stated, aol is right now the undisputed leader in the phenonom called the internet and on-line service.Whether or not they maintain that leadership or even increase it will remain to be seen but history has showed time after time that a big head start and brand recognition are a very tough combo to bring down. I truly don't know how to value this co right now and have sold covered calls this week against my position because of the huge runup in price and the huge premiums attatched to options of aol on both sides. When aol was at 83 early this week I sold April 85's at 12.5 and April 90's at 10.5 . While I would be happy to lose my stock at the equivalent 99 it wouldn't surprise me to see it go significantly higher from here. If aol grows their subs to lets say 20,000,000 over the next few years and the subs start to get valued at 1500 to 2000 per sub that cable gets, you're looking at a stock price of between 240 and 320. Now I'm not predicting that will happen, only that it is very conceivable that it could happen if aol stays on course. You might doubt their subs #'s but you really have no idea what they are. With the universe of overpriced stocks out there to short, I don't know why you want to go against this potential. Aol could fall on its face or it could grow into one of the biggest media enterprises in the world. I think the latter is more likely than the former. I sure don't want to be caught standing in front of this train. Good luck. MW

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