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Technology Stocks : 7th Level -- Ignore unavailable to you. Want to Upgrade?

To: slipnsip who wrote (912)	5/1/1998 10:44:00 AM
From: Scott Pedigo	Read Replies (3) \| Respond to of 1019

Hypsters is all I see on this thread anymore. Either the shorts spewing rants of doom and gloom in a purely self-interested ploy to drive the price down to $1, or the longs living in their world of wishful thinking and spinning dreams of an imminent ride to $20. Neither one is going to happen. My prediction: the stock drifts down from 7 until more contracts are announced, but doesn't go below 5. In two or three quarters revenue starts trickling in, giving a basis for the proper price. Why? Market psychology, not fundamentals, are currently the determining factor. I think the only thing that drove the stock below 5 after the fall from the first run-up was short selling. Then covering drove it back up to 6 1/2. A stable price is likely to be somewhere inbetween. The 2nd contract announcement and the TV interview temporarily bumped the price up by 2. Why won't the stock go to $1? Well, before the first contract announcement and the news of the product, the stock was trading in a range 1 1/2 to $2, but closer to $2. Before any of the hype and during the transition from a game company, while losing money and trying to stem losses, the company still had enough potential that stockholders were not willing to part with their stock for much less than $2. Now we have three factors which raise the base price: (1) a marketable new, interesting and unique product in a hot sector; (2) already two contracts to license that product in wide distribution; (3) investors who got in (ill-advisedly or not) at a high price, as much as $10-11. Mature investors can swallow a certain loss and go on to the next investment, but if the choice is essentially losing ALL their money (way more than half, say) or just sitting on a depressed stock and hoping for the best, they have nothing to lose by the latter. Their loss can't get much bigger and there is still some possibility of getting their money back by waiting. My gut feeling is that the level at which people are going to refuse to sell the stock and stubbornly sit on it is around $5. Why won't the stock go much above $7? When the stock gets up above $8, the now panicky and distressed investors who got in at $9 to as much as $13 are going to grab the chance to get out with their shirts. And the shorts are going to jump in in a big way. So until all the weak bulls are out, there is going to be a ceiling in the $9 to $11 range. Only very compelling news will change this, by which I mean something more than just another contract or two whose ultimate revenues are unclear. For what its worth: I have no vested interest in this stock. I am neither short nor long. I owned some stock before the first run-up, and took my profit already. I wish that all the hypsters would quit trying to manipulate the stock price on SI and leave that crap for the Yahoo board. I think that the readers here are sophisticated enough not to fall for it, so its just a waste of bandwidth.