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: Candle stick who wrote (9446)	4/9/1998 12:21:00 AM
From: Chuzzlewit	Read Replies (1) of 27307

Hi Candle. No, I don't agree. The point I'm trying to make is that the stock is worth what the consensus agrees it's worth, and that has nothing to do with P/E's, or book value or any other objective metric you want to apply. I wouldn't buy the stock because I think it's too expensive, but my opinion doesn't count. The real danger is in shorting these stocks. If there is no rational basis for valuation of a growth stock, and given that the market is as ebullient as it is, my approach is to steer clear. As a side point, it is very easy for a company whose sales are just over the break-even point to post astronomical P/Es. To see how potent that effect is consider this hypothetical. A company has sales of $100MM, with a gross margin of 60% and 59MM in fixed costs. Neglecting taxes, the company earns $1MM. Now suppose that sales increase by 10 % in the following period, with everything else constant. The company would earn $7MM -- a seven fold increase on a 10% increase in sales. I don't know, but it is possible that YHOO could very easily be sitting in such a spot. Watch out! Regards, Paul

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