Bill,
I'm not saying that AOL can't make 45 again. My outlook for the next few weeks is based purely on chart analysis (I wouldn't know how to correlate this company's poor financial performance to its resilient stock price using any type of standard TA). The stock has confirmed a sideways trend channel over the last few months. If the stock breaks out of the channel to the upside then it's anyones guess how high it may go. On the flipside, if the stock breaks through the downside there is some probability that it will support in the low to mid-20's.
For now, it appears that a trading range is firmly established and as a short term player that is all that concerns me. I sold my March 35 calls when the stock hit 38 7/8. I'm going short at 40.
The big picture is a whole other story (that's why this thread is so much fun). I think that from a fundamental standpoint, this stock is overvalued at 10.
There is one thing you can say about AOL; you never no where the stock is going based purely on news. Consider today. Tel-Sav is in a low-margin, low-tech (time reselling) business. Their rationale for doing the AOL deal was to give them "access to the technically savvy marketplace", and to provide online capability for service sign-up, bill review, payment, etc.
This makes me wonder how technically savvy Tel-Sav is.
1. AOL represents those users new to the on-line experience.
2. To me, "loaning" $100M to a company in the financial shape that AOL is in is a large amount of risk for a relatively small return.
3. Depending on AOL to get to the on-line community means depending on AOL's reliability record. Hardly a plus.
4. Why AOL? Tel-Sav is in the telco business; you would think they could set up their own web-page, thereby giving the entire internet access to their services.
All that aside, today the street loves the news because they see it as "revenue" for AOL.
It's my opinion that the stock will continue to fluctuate in its current range until the end of the current quarter. At that point, we'll see if AOL can post any earnings without resorting to their old accounting tricks. IMO, over the long haul AOL won't make money. |
