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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Anthony@Pacific who wrote (47846)	12/21/1999 11:50:00 PM
From: Softechie	Respond to of 122088

Here's some comments on JWEB from Briefing.com: 12:04 ET ****** Juno Online Services (JWEB) 64 3/4 +35 3/4: There is an FOMC meeting today, and there is plenty of talk that the Fed will move to a tightening bias, highlighted by a hawkish statement directed at the exuberance in the stock market. Frankly, the trading action in a stock like Juno Online Services is providing the Fed the ammunition to do just that. Consider that this stock closed on Friday at 16 3/8. At the close yesterday, it had nearly doubled, and today it is up a mere 123%, bringing its two-day percentage gain to 295%. First, yesterday's move was predicated on the company's announcement that it would be expanding its free basic service to include full Internet access. It is not our intention to delve into the details of that move as we discussed it in a Story Stock yesterday; and the full details of the strategic shift can be read in the company's press release. Instead, today's mention of JWEB is more of a diatribe as to how ridiculous some of the trading responses have been to corporate announcements, particularly in the Internet space, and seemingly, anything to do with Linux, B2B, or wireless plays. Yes, one can rationalize why a stock like JWEB is undervalued relative to its peers, but keep in mind many of the overstretched valuations to which it is being measured against have been built on hype, momentum, and daytraders taking advantage of small floats-- not to mention big assumptions about achievable growth targets. Admittedly, there have been some fundamental reasons why all of the excitment gets started in the first place, and stocks should move higher on such positive developments. In the case of Juno Online Services, the assumption is that by offering free Internet service the company will attract more customers which, in turn, will attract more advertising dollars. Also, there is a sense that customers using the free service will become annoyed by the targeted advertsing constantly displayed on a navigation banner that they will want to pay for the service, thereby driving up subscription revenues. Okay, fine, we don't have a problem with the stock moving higher on assumptions that the strategic shift will boost revenues one way or the other as those are rational assumptions. What bothers us is the irrational exuberance (yes, we said it) associated with such assumptions as not even the most seasoned market veteran could explain with a straight face how the Juno announcement is worth a one-day gain in the stock of 123%. We think such price action is dangerous, and ultimately, it is setting up many investors for a hard fall. Remember, there is no real metric for momentum. You just have to hope you are on the right side of the trade when the momentum shifts. Now, they say hope springs eternal so play the game if you must, but bear in mind that there are plenty of instances among the Internet stocks where hope has proven to be ephemeral.-- PJO