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Technology Stocks : Webvan Group (WBVN) -- Ignore unavailable to you. Want to Upgrade?

To: seed_partner who wrote (167)	5/31/2000 4:10:00 AM
From: Wizard	Read Replies (1) \| Respond to of 464

Be careful. $5 to $0 is still 100%. This is a total leap of faith. However, I didn't like this the first time around because the model is not frictionless - like some other internet business models. WBVN is capital intensive. But given how much of a beating B2C stocks have taken, I have to think there is a buying opportunity in something. I mean, the stock prices are such that you don't have to assume the internet kills bricks & mortar, they just have to build a nice business. There is no doubt in my mind that WebVan's model on paper is significantly better than a B&M supermarket. The companies do have the internet on their side and the internet is efficient. Atlanta should contribute something meaningful and Chicago & Sacto should come on in Q3. Before Q200, the company was basically in beta with SF being the beta site but that trial appears to be working reasonably well. The SF Bay Area is probably the ideal place in the world for such a service but I bet many cities will support WebVan. They have nearly 100,000 users in the Bay Area. 1mm users nationally @ $200/mo (very reasonable for groceries) = $2.4b in annual revenues. At their target of 12% operating margins and taxed at 40% gets you to $173mm in after-tax EBIT. A 50 PE on 173mm gets $8.65b market cap or about 4-5x from Webvan's current price of $5. Nobody knows how many users will end up using this service but if it works, there could theoretically be some network effects related to consumer brands being showcased on the home page. Or direct marketing for bringing other stuff through WebVan. We shall see...