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IAC/InterActiveCorp Message Board

  • Fullmoon_111 Fullmoon_111 Sep 3, 2003 1:06 PM Flag

    PE is 406?

    If that PE is correct, IACI is a strong short.

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    • Thanks Pea

      >> So you see, it's possible to make money shorting this

      I've never disputed that fact.

      Shorting is a perfectly legitimate trading strategy. There are even valid reasons to play this one on the short side.

      But it just doesn't suit me... I believe to short it successfully, you need to be able to get in and get out at nearly exactly the right time, and that sounds like speculation to me. When I speculate, I want to put money down that I can completely throw away (just like I did on those Aug calls! :-) ). And I've used up my speculation budget for the time being.

      Long-term, you are fighting a major headwind of a 7-11% annual improvement in the stock market since the 1900's.

      You are also fighting much larger taxes (more than double, depending upon your tax bracket) on gains if you don't hold for a year.

      I would say the time horizon becomes far more important to precisely get right if you're short... That's because I just don't subscribe to the alternate view that this stock is going to implode. And I believe that short-term blips (up or down) don't mean much when taken over a longer period.

      On a fundamentals level, I think it's got plenty of long-term growth ahead of it in nearly every sector it leads, that is not quite priced in.

      Still standing by my "short term shorts and long term longs will be right" prediction... and my price target for $48-59 some time in the next 1-3 years.

      I think it still can trend weaker, but I wouldn't look for this stock to reach the low-20's any time soon. But I've been wrong before. We'll see.

    • It depends entirely upon which P/E you are talking about.

      A *trailing* P/E on the past twelve months' GAAP earnings is indeed around 400.

      But IACI is growing earnings rapidly. Very rapidly.

      An *annualized* P/E on the last quarter's GAAP earnings is about 95.

      A forward P/E based on the 2003 fiscal year projected cash earnings is in the 40's.

      The reason there is such a large discrepancy is that this is a company where earnings are improving at a very rapid rate.

 
IAC
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