Altaba Inc. (formerly Yahoo) Message Board

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Technology Stocks : Altaba Inc. (formerly Yahoo)

AABA 19.63

0.0%

Nov 6 4:00 PM EST

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To: fut_trade who wrote (5403)	12/31/1997 5:48:00 PM
From: craig crawford	Read Replies (1) of 27307

<< Put it this way, he probably knows YHOO will be trading at 500 in 5 to 10 years. >> You think you could narrow that down a bit? That's a pretty broad timeframe. 5 years or 10? Let's just run those numbers. At $500/share assuming there are STILL only 50 million outstanding you get a market cap of $25 billion. What do you think a good PE will be for YHOO in 5 yrs? Surely they will be bigger so the multiple will have to come down. At 20 times earnings they will need to earn $1.25 billion. At 30 times earnings they will need to earn $833.3 million For a generous PE of 40 they will need to earn $625 million. Let's use the generous PE of 40 because the market likes to be generous to YHOO. $625 million divided by 50 million outstanding means they need to earn 12.50 per share. They are expected to earn 8 cents this year. This year.....Year 1.......Year 2...........Year 3...........Year 4.............Year 5 8 cents.......24 cents.....72 cents......216 cents.......648 cents........1296 cents So to acheive a stock price of 500 in 5 years YHOO will have to triple it's earnings every single year for the next 4 years and then double them in the 5th year. Of course they won't be able to issue any more shares in the process or they will have to more than triple their earnings. Even after doing all of that they would still have a PE of 40 (and I'm sure the market would give them one after a performance like that). How about this scenario? 8 cents.......32 cents......96 cents......288 cents........576 cents.......1152 cents YHOO quadruples it's earnings next year, then triples them for the next 2 years and then doubles them for the last 2 yrs. After all that they would still come up a dollar short so the PE would have to go to above 40 or YHOO would only be at 460. Do you really think this is acheivable? Would you like to drop the 5 years and say that YHOO will be at 500 in 10 years?

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