AJ, I understand your frustration with NAVR. The "potential" opportunity cost has been quite high over the last several months.
That being said, the key word to "playing" NAVR until NETR IPO is "over-valuation". Momentum buying, Internet feeding frenzy, and the Last Fool Theory will work for us longs as it is working for other Internet stocks.
Using the conventional formula, NAVR = $8(base) + 0.21 * 1.5(Pre-IPO Hype Factor) * NETR, we get the following matrix:
NETR => NAVR
$30 $17.45 (Low end; NETR valued at approx. $300 mil)
$40 $20.60
$50 $23.75
$60 $26.90 (Achievable first day NETR closing price)
$70 $30.05
$80 $33.20
$90 $36.35
$100 $39.50 (High end; NETR valued at approx. $1 bil)
NOTE - The base is formed not by historical NAVR performance, but by its recent low of $11 - 0.21 * $15 (expected upward revised NETR offered IPO price).
Fuzzy Considerations:
(i) The base can be reasonably set at $10 due to improving core business and the removal of Netradio losses from the book.
(ii) With all the recent focus and activity on streaming multimedia content with increased advertising and e-commerce opportunity (eg. LCOS's webradio, AOL's interest in Chancellor, YHOO's buyout of BCST), the Hype Factor of 1.5 may be conservative. As a comparison, DBCC had a HF of 2!
ONE POSSIBLE OPTIMISTIC SCENARIO - With a neutral market and increased rotation into "streaming" net stocks, NAVR can peak near $37.40, assuming an increased HF of 1.75 and NETR valued at $80.
The bottom-line is that all of us will get the chance to get out with a handsome profit. Don't be greedy and try not to focus on could of/should of scenarios. That will only drive you crazy.
To all the shorts out there, cut your losses quickly unless you have adequate margin power to withstand the impending rise. Regroup and reshort later if you are still up to it.
Marketeer |
