Here's a interesting look at Bid.com that was found on the Stockhouse forum-
<<FWIW, just a few comments from a shareholder (who bought high in Feb/98 @ 3.25 and watched this stock agonizingly go down to .56 recently, before selling after it rebounded for a nice little profit)
obviously with all of the excitement over the performance of most internet stocks(primarily U.S.) over the past year, it is natural to want to get a piece of that action
it is also natural to draw comparisons (like so many on si and this thread have done) of BII to its US counterparts ie. onsl,eggs, ebay, ubid, etc. who are all involved with internet auctions, and conclude on the basis of market capitalizations, bii appears grossly undervalued.
while at first glance, this may be true, i think bii has some serious obstacles that it needs to overcome (not the least of which is being listed on the tse as opposed to nasdaq) which hurts its ability to compete with its u.s. counterparts
my concerns in particular are
1. bii has to contend with a much smaller (and more conservative) cdn stock market - its underwriter yorkton has not exactly always supported the stock (despite having a
representative on the bod) and the company has been forced to undertake very dilutive financings at $1 and $1.50/share resulting in about 32 M (soon to be 40?)shares out on a
fd basis - also more difficult to attract u.s. investors to tse (which is what this co. really needs) - while its goal is to get listed on the nasdaq early next year, (they need to first get to $7 Cdn on the tse), the shorters know that to sustain such price appreciation (given the share float), the volume is going to have to be astronomical, given the speculators, daytraders,etc. already in this stock - so they can ride the price appreciation till the buyers dry up (i.e. to an unsustainable level, in this case $6), knowing that with normal profit taking, no dramatic news etc., they can drive (or manipulate) this stock back down (and in so doing scare off many investors (and not speculators) who will be needed to maintain a $7 share price.) - even though the volume has been incredible the past few weeks, this stock has a long way to go, imo, before it can sustain $7/share, (especially given how the company bungled its last news release earlier this week, trying to build-up to a scheduled tuesday announcement to help sustain the $5-6 price the stock had reached, and then having to release the news early (on Monday) and creating expectations that were not met).
2. the shares issued by ebay, ubid, etc. on IPO were very small floats of 5 to 10 M shares (or even less?) - creating a classic case of supply/demand where the supply of these
stocks was severely limited (at least initially, given the demand) so that the share value is driven up and allow, at least in some cases, the parent company to cash in on manic
internet stock prices, and obtain funds for further development - (bii on the other hand has had to expend a lot of time and energy in getting their measly, dilutive financing, as opposed to fully developing their site and trying to keep up with, let alone stay ahead of their competition)
3. imo, this company has been also very slow to leverage a crucial competitive advantage i.e. - its association with aol and its site - despite having access to aol traffic for more than a year, the company has fallen far short of its goal for 98 sales (recently revised down to $25 M from projected $50M a year ago. (i am also disappointed in the
development of their site, especially compared to onsl, eggs, zauction, etc. - only recently have their offerings/ selections increased/improved and they still pale in comparison to their u.s. competition, imo, and the canadian site is still a joke - if an american accidentally enters it, i'm sure he won't come back - a lot of their stuff is also refurbished and not new)
4. despite claiming they don't carry inventory, their margins are incredibly miniscule, especially if they represent commissions (especially for liquidation sales - company was formerly named internet liquidators international - you would expect a healthy commission) - either they are including sales (and cost of sales) of products they don't own but get a commission on, or their actual "product/ service” they sell (commission?) has razor thin margins meaining their volume has to ramp up 5 fold before they can even hope to cover their sg&a costs and have black ink. - while this might eventually be possible (given analyst projections of growth in online sales), their goal of becoming profitable in the second quarter of 99 sounds a lot like their lofty (and unmet) projections made a year or
so ago. the competition isn't exactly going to give away their market share to bii either, and you can't afford to cut into your already low margins to attract new customers or get back old ones unless you have the necessary staying power/financing (i.e.$$$$$$) to withstand some hefty losses.
don't get me wrong, i hope this company succeeds, but since i've been following it, it has moved way too slow to take full advantage of its key relationship with aol, and has also disappointed with its web site (in particular the u.s. site), especially when compared to onsl, eggs, zauction, etc.
this latest promotion, while welcome, was a long time in coming and hopefully the company follows through with at least some of their announced plans (cable deal, european market expansion, etc.) early in the new year so that this “pre-christmas” momentum is maintained, otherwise we may see $.56 again sooner than anyone thinks. >>
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