michael, I'm not shorting anything, but I guess I would be in the "share a different opinion" category when people want to start throwing out all kinds of fundamentals for a "new era" approach.
Fact: The revenue generated by the internet over the next few years will see explosive growth., you said. I agree, but:
This year it's estimated that there will be $30-50 billion dollars spent shopping online. Ad spending is estimated at $420 million, or about 1% of online commerce spending. Assuming these numbers hold, where are we going? Well, sometime in the next decade, online commerce is predicted to reach $1 trillion (1, with 12 zeros after it). That means there could be $10 billion in ad spending. If a company, say Amazon, were successful and captured all e-commerce and all $10 bil. in ad revenue (pretty much their entire profit in this very low margin business), they would then have earnings of $63/share (158 million shares and $10 billion in earnings). So, if this were the scenario, they are only trading at 2.5 times ten-year out earnings ($158 as I write this). A bargain!
--John |
