Zack, pick up September's issues of Money and Individual Investor and last month's Smart Money - all have excellent articles on Internet stocks and why they trade so hot. Yahoo up 400% in the last year alone; DoubleClick from $17 to $41 in six months. Most of these have come off a bit in recent weeks, most notably Amazon.com which tumbled over 22 dollars today... and still trades at over $83...
Scary. With Internet stocks, the analysts talk earnings in multiples of 50 (fifty). Whew... Even a company like Amazon.com, which won't show a profit for many years to come, attracts investors and analysts alike.
Why? Membership. Yep, it's all about who, and how many, is in your database. AOL recent released figures that placed a "value" of $700 for each and every member. I've read cable and video company figures that placed $100 - $150 per head, but $700!
Bottom line... Even if KCAP failed miserably, and only achieved a tenth (1/10th) of their 5 million member goal (500,000), that would still be a $50,000,000 value at only $100 ea.!!! Then divide that figure by shares outstanding (50MM/17MM) = $3.00/per share, with no consideration from any of their other profit centers.
I'm in the wrong business. Go Internet & GO KCAP!!
DD |
