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Technology Stocks : EarthLink Network ELNK Wraps Your Fish
ELNK 5.6300.0%Mar 8 4:00 PM EST
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To: devkn who wrote (3)1/27/1997 4:21:00 PM
From: John Grandy   of 220
 
devkn,

The old Business 101 thesis that the stock market always correctly and immediately discounts reality is a false one. Stocks can trade completely out of whack with reality - even for long periods of time. I would suspect that the brokers pushing ELNK are using a 2 pronged approach right now:

1. Telling potential buyers that ELNK has no potential problems similar to AOL's and that hordes of AOL users are switching over to ELNK. See my other posts for why ELNK potentially has much much worse problems than AOL.

2. Telling potential buyers than George Soros owns a stake. Soros stakes have been very influential on the market over the last year or so when the Soros name got widely recognized in the media. Typically the stocks run up for a week or so and then sell-off. More than once Soros has sold into such run-ups.

I don't advocate trading this stock, although substantial money could probably be made if you had the killer trigger finger. I advocate going long-term short the stock after the 30 day restriction is up, as long term I believe the company will fail miserably.

If you're going to trade it though, keep in mind that all the primary IPO buyers are probably looking to get out -- no 1st tier investment banks were involved in the underwriting and so I doubt there is much stock held by long-term players. The stock could get knocked back at any moment.
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