ok, so, if there are 10m x .85, or 8.5m shares feeding new capital to NAVR, and these shares settle at, say $60, that gives NAVR 5.1 billion?? divided by 13.5m NAVR shares = 37.70 per NAVR share.
The problem, of course is why do you think NetRadio will settle at 60? Hint, if it settles at 60, times 8.5m shares, it's not 5.1B, it's 510M, a factor of 10 difference. Also, this stock still has some options/warrant remainant from last April. If I remember correctly, in April 1998, there were 7.1M shares of NAVR outstanding, NAVR then offered another 7.1M as options to some large banks to finance some internal operations. It also issued 2.6M warrants exercisable at $3 to these banks. Last I checked, the 13.5M shares outstanding, that means there are still 3.3M options/warrants not exercised yet. Therefore, when you do your math, you should divide by 16.8M instead of 13.5M. Also, when they make the offering, their holding of 85% of Netradio will go down. Suppose they offer 1.5M of the 85% of 10M shares, then after the IPO, they only hold 70% of the company. Does that make sense? CDNW, NKTI is only worth 360M, 217M market cap respectively. Assume Netradio is somewhere in between, say $250M market cap, then each share is only worth about $25. Assume NAVR holds 70% after IPO, or 7M shares, then that's 175M of market cap to NAVR. Plus the $6/share intrinsic price of itself, that's another 100M, which gives the total market cap of NAVR to be about 275M. Divide that by 16.8M shares (assume all options/warrants have been exercised by then, that gives a per share price of 16.37/share, which is about $1.5 lower than the current price.
Of course if the internet mania continues, we might see Netradio get to $50/$60, which will suggest a $26-$30/share price for NAVR, but I read somewhere that NAVR only intends to keep a 50% stake on Netradio, which means they will offer 35% in IPO. This will of course screw you big time, as there are more floats in the market and less holding by NAVR which decreases its value.
I suggest you pay attention to these factors when Netradio spins off: # of shares in Netradio, % of Netradio NAVR will offer in IPO, underwriter's valuation on Netradio, current internet IPO environment, # of internet IPO on that week, month...
It's all about supply and demand, I think the $18/share price for NAVR now isn't too expensive, given the fact that a lot of the above factors are still pretty favorable, but I heard on Money Line that there could be up to 50 internet IPO in the next month after the MKTW IPO did so well. It's all about supply and demand. I personally will sell my shares at around $20-$25. I don't think we can blindly think that Netradio will shoot through the moon to $200-$300. They aren't Ebay, YHOO, AMZN, they are not monopoly, they have stiff competition. There's no reason to support that which puts NAVR's value at $70. I think $50-$60 for Netradio is already extended. So $26-$30 is really the upper trading range for NAVR in my opinion.
Take what's worth, I just wish everybody to be rational and don't just look at EBAY, YHOO, AMZN, MKTW and think that NAVR/Netradio will be the same. |
