AMERica on-Line, Another over valued company? Message Board

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Technology Stocks : AMERica on-Line, Another over valued company?

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To: Gary Youree who wrote (6)	2/28/1996 7:45:00 PM
From: Scott Maxwell	of 222

I also listened to the CNBC discussion and can confirm that Gary is correct. On a technical basis the stock is holding up well. It may well recover and go on to new highs -- no one can tell when a bubble will burst. On the fundamental side, though, things look bleak. Several important content providers have set up their own websites and deserted AOL (or scrapped plans to open shop there). The financials are getting cheesier, and if costs to develop new subscribers were taken as expenses instead of capitalized, the company would show huge losses. The usability of AOL for investment research is good, but that has little to do with its perceived long-term lock on a profitable mass market, which is what supports the stock's very high valuation. If that perception begins to slip in the minds of fund managers, the stock price will decline. Stocks which trade on perception are most prone to sudden collapse -- an apt analogy might be RCA in 1929. Millions of people had RCA radios in their homes, but that didn't stop the stock from tanking.

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