I'm not arguing valuation. If you go through my hundreds of posts on this thread during the past couple years, I have rarely argued valuation...I've stuck mostly to Yahoo's business momentum issues and the technical condition of Yahoo's pattern. It's proven to be the correct focus.
The valuation is what it is. There are enough institutions and others who want a piece of this business to keep the price expensive. Friday confirmed their conviction and added more believers. It looks like Yahoo will remain expensive. There's no free lunch.
I think Morgan Stanley's Mary Meeker said it well when she wrote as part of her (initiation of) coverage report Friday:
We are reminded of a day in 1994 when we initiated coverage of Dell with an Outperform rating at a split-adjusted price of $2.73 per share (the company went public at a split-adjusted $0.35 per share) - I was so embarrassed, as a tacit, but "unofficial" Wall Street believer in Dell that I couldn't look Michael Dell in the eye - you know, it seemed like we might have missed the big move. So here we go with Yahoo! Party on. Price target? What was our price target for Dell at $2.73?
Bottom line, [her emphasis] Mr. Market will push Yahoo's valuation around as psychology waxes and wanes, but, simply 32MM sets of eyeballs, and growing, in time, should be worth nicely more than Yahoo!s current market value of $5B. Mmm, what's the value of leadership in the fastest growing medium in the history of the planet? Yes, we live in special times.
We believe that Yahoo! is one of the more interesting companies out there. The company is hitting on all of the key "ten-bagger" attributes: 1) Huge market opportunity; 2) great management; and 3) good products with brand and share leadership. Again, love the product, love the company, so we gotta love the stock. |
