Just speculating here....
I believe that the character of the company, and hence the character of it as an investment, changed late yesterday afternoon.
Yesterday morning, it was an undiscovered value play -- cash value worth considerably more than its market cap. It didn't matter what the company does; people were buying dollar bills for 80 cents.
By yesterday afternoon, as the stock ran up ... on relative volume so high as to provide a clarion call to every momentum player in the world ... the market cap came to reflect approximate parity with its cash value.
(Notice that I avoid speaking of book value, because I have no idea precisely how much of that book value was in assets which transferred with the most recent sale. So there seems to be no real way, today, to determine the company's new book value.)
So CUST is no longer a value play.
What is it?
As of today, the company has no product and no sales.
It is an idea stock -- the expressed idea being to provide individualized CD's by overnight delivery.
It will take both time and cash to make this happen, and when it does, what will the result be worth. Is this a valid idea? What competition for individualized music in a transportable form is there? What other possible applications might their patented technology be useful for?
In other words, I think this is now a R&D company, albeit with greater emphasis upon Development than upon primary Research.
The model may well be that of a single product biotechnology stock, substituting public acceptance for FDA acceptance, and shortening the time-line because we don't need formal Phase I through III trials. Public acceptance will be our clinical trials.
Biotechs typically are news-driven, running up nicely upon the completion of each milestone in clinical trials or FDA panel acceptance. But after each run up, their prices tend to trail off noticeably. Here is an example of one with which I am familiar: quote.yahoo.com
It is possible that the momentum players have not tired of CUST yet, but I would not be too surprised to see CUST give up 40-50% of yesterday's gains over the next few months. As a matter of fact, I am kicking myself this morning for not having locked in some gain by selling 1/3 of my holdings late yesterday. (I really like to play with "house money" <grin>.) At a minimum, I plan to keep a mental stop loss to protect some of my gains.
Other thoughts?
JSb. |
