YHOO's net income from operations, before taxes and interest income, was 3.7 million dollars. Their market capitalization is about 5.4 billion dollars.
5.4 Billion dollars invested in U.S. Treasuries at 5% annually would give a before-tax net income of 68.2 million dollars for the same period of time.
My prediction for tomorrow, for fun, open at 102, high 105, low and close at 98.
It's not silly to talk of comparable valuations and returns. I may be foolish (small "f") to be short YHOO because of the momentum, but I am also Foolish (big "F") to say that this company is a long way from growing into this market cap and is hugely overvalued here.
I have a small trading position in it, have jumped in and out, bought some at 95 today to hedge my short because the call premiums were way too high. So, certainly YHOO may run up some more, just as certainly, it IS a tulip. I would not want to be short tulips in Amsterdam 1525, but I just as certainly would have been looking for the opportunity to go "short" tulips and "long" oxen in 1526.
Kids, don't try this at home.
My SI post yesterday:
>>I'm going out on a limb here. Usually do not make short term predictions on stocks.
But the price of YHOO has absolutely no relationship to its current earnings. Anybody who can put forth a rational argument to the contrary, I'd love to hear it.
So, I think earnings will be a sell trigger, no matter what the number. In fact, I expect YHOO to beat the estimates by 50%, come in at 0.06, and promptly lose a billion or so in market cap.
Saw it in the tech stock correction in July 1996, the set-up is very similar.<<
From Amsterdam......
per von Zebra |
