I agree with the difficulty, if not impossibility, of correctly valuating an internet stock. I am not arguing with you on this point. The only reason I brought this up is because the original poster was discussing trailing p/e, which is about as unreliable a valuation method as you can use for this type of stock. However, those who get paid to do valuations do have methods, and it is not just wishful thinking. Whether you agree with those methods or not is up to you.
As for me, AOL's current valuation is a non-issue. What is important is their tremendous growth, adding about 1M customers per year in the US alone, benefiting from the explosive growth of e-commerce, entering into alliances and partnerships with other leading technology companies, and reaping the benefits of a technology that is growing at 100% per year. And that is not wishful thinking, it is a fact that the internet has been growing at that rate for many years now.
I will worry about valuation when all of these things reach maturity and slow down, but by that point my bet is that I will have been richly rewarded.
Those worried about valuation should not be in this type of company. |
