Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Altaba Inc. (formerly Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: Bill Harmond who wrote (4056)	12/9/1997 10:14:00 PM
From: Bill Wexler	Read Replies (1) \| Respond to of 27307

And you fail to mention that Iomega went nowhere for over a decade before starting to run up. When it did run to its 1996 high, it never reached yahoo's extremes of valuation relative to trailing sales and earnings. At its high, Iomega investors were either gambling on the greater fool theory, or simply kidding themselves that Iomega could somehow magically grow into its valuation fast enough to keep the stock price up. They were wrong. Despite great earnings reports, the stock keeled over. I could even argue that on a relative valuation basis, Netscape - at its peak - was cheaper than Yahoo. I point out (yet again) that Yahoo's actual market cap is now bigger than Netscape's, and in the same ballpark as Iomega's. Not only is Yahoo's relative valuation extreme, but now that it is a multi-billion market cap company, the momentum will be harder and harder to maintain in the short term. It's market cap places it in the same league as established companies with far more powerful balance sheets, 8 and 9 figure revenue streams and P/Es that can reasonably assure investors that they'll do better than a savings account or treasury note. Too far, too fast = enormous risk = exponential decline in rate of new investment. We can argue all day about Yahoo's business model. But the fact remains that good stories tend to get old real fast in this market...even if the story eventually pans out. At the end of the day, investors want a return on their money. Buying Yahoo now IMO is simply the transfer of wealth to the Bill Wexlers of the world unless you're nimble enough to bail out right before the last fool. Once Yahoo trades at a P/E more in line with its demonstrated earnings growth rate, I'll be more than happy to cover my short. Optimistic projections place earnings growth at 100% Let's be super-optimistic and say Yahoo grows 100% next year and 150% the year after that. Current P/E = 1200...and most of that "E" is still INTEREST. Good luck.