Chmaj you wrote:
<<A question to all:
if aol has a 10 billion valuation, why can't yhoo have such a valuation as well?>>
Good question, lets compare revenues, not EPS to look at valuation. Since these are both internet companies, a dollar's worth of revenues should be roughly worth the same to a shareholder.
AOL:
2,442 million gross revenues in 1997 (My best guess by trend, actual report 2/6/98) 103 million shares. Generating about $23.70 per share in revenue.
So, at todays closing price, 100 1/8, you would pay $422 to buy stock representing $100 in revenue at AOL.
YHOO:
67 million gross revenues in 1997.
43.1 million shares. Generating about $1.50 per share in revenue
So, at todays closing price, 66, you would pay $4,400 to buy stock representing $100 in revenue at YHOO
Let's repeat that:
So, at todays closing price, 100 1/8, you pay $422 to buy stock representing $100 in revenue at AOL.
And, at todays closing price, 66, you pay $4,400 to buy stock representing $100 in revenue at YHOO.
Neither one seems like much of a bargain, but I'm pretty comfortable with a YHOO short here. Didn't jump in all at once so if it goes up, I'll just short more. I agree, overvalued stocks can get more overvalued. But, over time, prices seem to come to more rational valuations. If I made any math mistakes please let me know.
At these valuations, I am strongly reminded of PRST. Is Howard Lutts behind the curtain here?
Hope we all make money
Zebra |
