Robert, I am basically an investor, not a trader, so I seldom look at a stock like AOL for investment purposes. You asked "Everyone expect this stock to plumet,but will it?" Here is my 2 cents.
First, you have to look at who is buying and who is selling. By that I mean the big volume movers. At the moment, I still believe that the big boys have not made their move yet. Anyone who has access to block trades please post. My guess is the sellers will be the institutions/mutual funds in the immediate future. I don't see institutional buyers coming in behind them, as in the case of COMS that resulted in 20+million shares daily volume. The buyers then will be shorts, taking profit along the way. Short sellers will also be, of course, sellers, if they find shares to short.
After this round, it will depend on who panics first. If the shorts got squeezed, then the shorts will be the buyers and the funds will be the sellers. This, however, will not last forever. The more likely scenario is a big fund decides to dump. The big drop will occur on a day that buy sell imbalance triggers further panic and more funds decide to dump, not wanting to the last one holding the bag.
When will this happen? My guess is sometime before during this quarter and then again after release of this quarter's earning report in May. It could start with no news, just one major holder who decides to start selling. It could start with any of the following:
- AOL announces subsriber dropped to xxmillion, from the 8 million reported last quarter.
- AOL filed to sell xxx shares, proceeds to be used as working capital and related.
- AOL to issue xxx million in debt instruments.
- 30 AG considering refiling charges that AOL did not live up to settement and continued to solicit for new subscribers.
- VISA and MasterCard reports a huge number of payment disputes on AOL charges.
- 1, 2 or more analysts downgrades on the same day. I always find it amazing how a lot stocks received analysts opinions on the same day, they don't get together and coordinate their announcements, do they?
Finally, we can take an informal survey here
- how many of us are current shareholders and how long will you hold on or add to your position?
- how many of us are not shareholders and are looking to purchase?
Please respond.
Ramsey |
