Hi MW,
Yep, those are the standard arguments for investing in an un-valuable
growth stock in this stage (which AOL has embarrassingly been in for
several years now). I've heard them before, sometimes they pan out,
usually they don't and, in retrospect, were plainly part and parcel
of the stock's hype litany. I'm very short this stock, simply
because I don't believe the story you've outlined will ever come to
fruition, though I do believe that you believe it. My short position
could be wrong, or my timing could be way off, but them's the odds.
On the lighter side, for further insight I contacted my good friend,
BizarroInvestor, for his reasons that AOL would be a good investment.
Since this market is so bizarre (valuation-wise) I thought his input
might prove useful. Please remember that in Bizarro-world, everything
stated by its inhabitants is to be interpreted backwards.
Here's his (unedited) top ten list:
Ten Reasons BizarroInvestor Think AOL Too Good Investment:
3. AOL make too much money.
9. AOL make customer too happy, treat with too much respect and
concern for privacy -- not like hapless advertising guinea pig.
10. Too good access to internet -- no disconnect, busy signal,
unannounced outages, e-mail never get lost, e-mail super-fast!
8. AOL proven, stable, well-considered business model, no-risk
future -- market cap too much low.
6. Analyst no hype, minor announcement worth 5% pop every time,
reiteration above previous one year target not distribution --
brokerage house want new investor to make too much money, too.
519. Institutions not discover AOL yet, hold less than 20% -- will
buy AOL, drive price up too much.
2. AOL convert from stupid, undependable, cyclical service utility.
Now is smart, predictable, non-cyclical advertising medium.
1. No free content, e-mail, or chat on internet -- only annoying,
voluminous, advertising everywhere. Everyone need AOL right now.
7. Advertising partner established, well-funded business -- all
deals guaranteed to make too much money.
5. Subscriber growth accelerate too much -- now in speed-up time of
year.
4. Stock move unfettered in open market -- October expiration close
exactly at $85. AOL always close on even five dollar multiple!!
Stock move up in nasty tech sell-off because it too good, not because major holder fear first sign of crack cause rush to
exit.
Hope this not help, Hello.
BizarroInvestor. |
