>No one questions that it's overvalued, it's just when it will crash. ;-)
Well, it depends on what you use to value companies. If you use price to sales, then EGGS is undervalued with respect to it's competitors. Obviously, we can't use PE for these stocks because there is no E. It is clear to me that we are in internet "land grab" mode. Some of these stocks *will* justify and exceed their current prices. AOL, for example, has been called overvalued for a long time, but it seems clear now that they will be one of the winners.
I look at it like the bio craze of the 80's. Several companies I bought and held were losers. AMGN more than made up for those companies.
I think EGGS will be one of the winners too, because they have experience in distribution, sell to businesses and consumers, brand name and focus on software but plans for controlled diversification. The key to EGGS future is sales growth from the advertising push, controlling the cost of acquiring eyeballs, and converting eyeballs to sales. I believe that not paying zillions for portal deals is smart. There are better ways to develop the market.
When I add up their closed auctions, it is clear to that they are doing at least 2 mil this weekend. If that rate is sustainable, the estimate of $195 mil for revenue is too low. Which could mean they turn a profit sooner than expected.
Time will tell us who is right. I do believe the time will come to short EGGS, but I don't believe that time is now. |
