Shorting stocks: High fliers Message Board

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Strategies & Market Trends : Shorting stocks: High fliers

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To: Mark Marcellus who wrote (652)	3/4/1999 4:00:00 PM
From: Q.	Read Replies (2) of 709

Mark, re. BFLY I am generally in agreement with your take on the company's prospects. One thing that you didn't mention, though, is that the market cap is pretty small at about $50 M, so if their concept and brand does take off, and if they are able to get good margins someday, then there is the potential for the thing to go a lot higher. OTOH, the market cap is way too high compared to the present revenue rate. So you're left with the usual problem with internuts: you are looking at the company at such an early stage that the market cap is way too high based on their present meager revenues and their negative eps, but you can imagine scenarios where the market cap will be justified and then some. So you're speculating on the extrapolation of the business model when they aren't early stage anymore. I've been holding a boxed short in BFLY ever since the warrant redemption play was over in December. I've been waiting for a good time to sell the long side and expose the short side. Two such opportunities have occurred when the stock went to about 17, once in January and once yesterday, and I missed both opportunities. I'm just a little nervous about trading this one.

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