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Technology Stocks : Creative Computers(MALL) -- Ignore unavailable to you. Want to Upgrade?

To: Secret_Agent_Man who wrote (783)	11/28/1998 5:41:00 PM
From: Steve Lin	Read Replies (2) \| Respond to of 1634

====== MALL Share Valuation Examined ======== nw, thanks for your insights. what you're talking about is forecasting the price of UBID. it's a complex process lending itself to many subjectivities. you are entitled to yours. you are correct about SUPPLY vs DEMAND driving the price of UBID and MALL. i don't think i can argue with you about that (i think they drive all market prices don't they? - tough to argue with such truism). but there is definitely an underlying connection between the parent company and the subsidiary. MALL owns 82.3% of UBID. let say your trenchent observation comes true and UBID is bid up (with all the growth potential and revenue growth discounted), there will definitely still be a price parity between MALL and UBID. and that's what i want to have a good grasp on. what i really want to find out for sure (hopefully with people in this thread who may already gone through it) is the approximate price parity between UBID and MALL. what i came up with is that UBID will need to be bid up to $364.74 in order for MALL to be at $56. Message 6594954 can someone who's done the price parity evaluation share some insight about whether there are flaws in my formula. would really appreciate that. btw, nw, why do you think MALL is popping? i think it's because MALL owns 82.3% of UBID. UBID may very well be bid up since your forecast mentioned very positive statistics. but i think it's ludicrous to insist that supply and demand will ignore the correlation between the two. if UBID gets bid up (more demand right?) to $100 (positive outlook discounts growth rate and profit potential) then MALL gets $130.03 million right? ($100 x 1.58m shares of UBID x 82.3%). $130.03 million / 10.18m of MALL shares outstanding = $12.77. MALL price increase up to $12.77. That is a basis for price parity right? Supply and Demand may continue to change but how far you think they are going to stray from the basis. if UBID goes up, then it is going to discount the potential and growth you have mentioned. cool. i don't need to argue with you on that. but UBID should have to be bid up to $350 for MALL to be at $56. you can maintain that supply and demand will drive the UBID price up to $350, that's cool. i just want to know how to price MALL when it does. how much of the valuation of MALL is based on UBID right now? i would say a lot. we know the intrinsic value is at $10 before the UBID prospect. UBID may have all the growth potential. Supply and Demand will probably drive the price up. but the parity between UBID and MALL is unmistakable: [(UBID price x 1.58m shares of UBID x 82.3%) / 10.18m shares of MALL] + $10 MALL's intrinsic value before UBID prospect = basis for MALL's price in relation to UBID. ALL, please correct me on the FORMULA if i made a mistake. steve lin