Mike Winn may have an abrasive style and be short on facts, but he has some valid points that newbies should consider.
In contrast to MW, I believe that the Y2K problem is real, the embedded problem is very serious, and that Tava is in a unique position to capitalize on the situation. Nevertheless, it is not at all clear that the stock is worth $8. Despite what this thread would have you believe, stocks derive their value from earnings, not PR.
In order to get back your $8 purchase price, the company will have to generate $8 in discounted future earnings. With 16.6 million shares currently outstanding, this means that they will have to earn a total profit of $132.8M (present value) in the future. Jenkins himself said that their goal is $125M in revenue in 2001! With as many as 22M diluted shares outstanding, the total required profit rises to a present value of $176M just to break even.
Jenkins obviously doesn't expect Y2K to generate these profits, so it will have to come from their (previously unprofitable) core business after 2000. Y2K can certainly be used to leverage their core business, but to this degree?
At $8, extremely high expectations for Tava are already built into the stock price. Supporters on this thread have previously been unwilling to attempt to quantify Tava's potential future earnings. Instead, they just keep cheering and begging for more PR. This is hype, not due diligence! |
