You see the tug of war here about valuation, one which the web's extensive power is upsetting majorly:
1) "A stock is worth whatever it's selling for because that's what the "smart money" is buying and selling it for, therefore that's what its worth. After all, they know a LOT more than me about this company, and they wouldn't be so silly as to oversell or run up the price too high." This is a little guy's view of the efficient market theory, vastly estimating the street's power to efficiently price ALL stocks.
2) A stock has an intrinsic value at all times which is rarely, if ever, reflected in the current price. here's where the web has helped us to team up, research and share news to much better establish whats going on with a corporation, and with that, to gain our own independent idea of real value in whatever stock market evaluation environment we're in, smart money's asking and selling price notwithstanding. Obviously I'm in this latter camp, seeing enough loony big money precedent to know Big money doesn't mean smart money. oh, they'll think they're very smart when a year or two from now they're happily buying and selling AXC for "only" 20X 99 eps or some other such much higher price, accumulating shares by the hundreds of thousands. "oh no, it was way too risky at 7, but here at 54 it's just right, nice 30% share price appreciation left in it. Let's buy some more!" Thinking like that will pervade the street as the AXC story goes out.
If you know what you've got, you should bet MORE bullish, not LESS, as the price goes down. Why, here, you're even getting the current businesses at a discount! Dont you remember repeated analysts
PA merchant group, II, SSI, Redchip, all saying their current business is worth $8, with PA saying a few months from now it's worth 10-12? And now KM is working AND going to brought to market, admittedly by only one co so far formally declared, but it still ups the eps equation.
I too don't know how low it'll go, but I do know many sellers are going to be kicking themselves in the pants for selling WAY below it's current fundamental value, w/o even the enormous promise of KM and the many other techs they've got on the back burner!
I'd be VERY interested in a running tally of institutional holdings on this one. Thanks for the TA- anytime folks I'd love to hear the black box's take on valuation. Still, I dislike the practice of pricing things ONLY because it's going down or up, puts extremes on valuations much wilder than the fundamentals warrant.
Buy buy buy! there's no risk here at this price! |
