The truth is, all that's going on here is just a
big market-hyping game being played by
momentum traders on the Nasdaq electronic
stock market, which is where nearly all
Internet stocks are listed.
That's the lead in to the excellent article,
stocksite.com
("Insider Scoop" by Christopher Byron) just posted by Than.
One note though, the author is working with the incorrect and
out-dated float figure for AMZN of 6 mil. The actual float is
something like 19.3 mil. (yeah, broken record, but as long as
it keeps getting mis-reported in the media, I'll keep correcting it).
Still, using the author's rule of thumb that a stock should be
be discounted based upon the percent of float vs. outstanding,
the value of AMZN would come down to 19.3 * 120 or 2.3B. Sounds
a little high to me, but whatever.
On actual valuation vs. virtual valuation, the author wrote:
In a sense, the smart money on Wall Street is
already doing just that--insisting on a huge
discount from the market price when pumping
real money into these companies in return for stock. Thus, when the
Walt Disney Company last month bought 43 percent of Infoseek
Corporation, the weakest of the four major search engine companies,
they didn't pay anywhere near the $42 per share high that Infoseek
touched on June 18, the day the deal was announced. Instead, when
you work through all the fine print, it turns out Disney paid no more
than about $11 per share for the stock, or about 25 cents on the dollar
from what was then being quoted as Infoseek's market price. That's not
much different from the 80 percent discount that the stock would
warrant simply on the basis of its shares outstanding compared to its
float.
There you have it, when the actual deals are done, nobody is
paying retail, not at today's prices. And in at least one case,
cited above, there's a 75% off sale. |
