>>I justed shorted SEEK at 38 13/16<<
Which is better at this stage- shorting or buying May/June/July 25 puts?
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How about this for an answer. SEEK is ok for a short, but I think I might like SPYG better. SEEK just got a two-day 6 1/2 point haircut that took a little of the fluff out of it. At any rate I would go for puts that are more in the money, like the 35's or 40's.
SPYG management have demonstrated that they haven't executed like other internet companies like YHOO, XCIT, and yes, even SEEK. Just look at a SPYG chart. Long-term downtrend. They just reported revenues up only 25% over last year, and that was after excluding a one-time MSFT payment last year. Leave in the MSFT payment and revenues were down almost 60%. Compare that to companies like YHOO, XCIT, LCOS, SEEK, etc. who are doubling and tripling their revenues. SPYG has tripled this year in sympathy with the other net stocks but it's underperforming the leaders in financial performance.
Even better, this company has slid from around 60 to 5 before bouncing to 15. There is tons of overhead supply for the stock to work through. Lots of people sitting on losses waiting to get out. This will help keep a lid on the price. The float is 12 million which is large enough to keep a good squeeze from happening. (Unless you all jump in and short with me). <g>
SPYG isn't expected to even be profitable this century. Estimates are for an 0.80 loss this year. Estimates for 1999 are a 0.10 loss. Let's be generous and say that SPYG reports a 0.10 profit instead. At it's current price of 12 1/2, that would be a PE of 125 on 1999 numbers. And remember they are supposed to lose 0.10 in 1999, not earn 10 cents. We can only assign them a PE on profits not losses.
I don't see why SPYG shouldn't see single digits again soon, it seems like a better percentage opportunity than shorting something like YHOO or even SEEK. |
