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Technology Stocks : AOL, now I get it
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To: yard_man who wrote (225)12/16/1996 7:08:00 PM
From: Joel Sternberg   of 496
 
The infrastructure isn't worth much to potential suitors--you can effectively get that from book value. It is the subscribers that are worth much more, but certainly nothing close to what AOL is trading for. A good exercise, IMO, is to put on a value per subscriber and then multiply by $7+ million, and divide by the 93 million shares. I think that this company is best valued in this way, at least until they have real earnings. If you agree, then it comes down to the value you place per subscriber. I figure they are worth about $250 per subscriber given the churn, and come up with a value of around $20.
(Mind you, I wouldn't buy it at that price, but I cannot see someone shorting it at that level until new info comes along showing a further loss of subscribers or slowing of subscriber growth.) Naturally, I could see raising that level as they add more subscribers. Of course, that is my opinion as someone who does not see why anyone stays with AOL.
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