Remember what happened to Boston Chicken and those high flying bagel stocks of the mid 1990s? These are similar P/E levels. It's not sustainable. The doughnuts taste great, but the sky is not the limit. It's just a matter of time. Hopefully I will find a broker that will short for me.
Look, Boston Market's P/E was around 300 when they did their IPO. The price topped out in the 40's. They then went back into the market and issued another $30 million worth of convertibles in less than a year after the IPO.
Is the stock over valued, sure it is. I've taken down my position some over the last few weeks. And I have definitely not been averaging up since I bought in the mid-thirties. But please get your comparisons straight.
Also, I can't believe people are still talking about the lockup ending in October. To me there are other great short prospects, Microstrategy dropped 2+ points in one day. That was a nice couple thousand. Why does anybody want to keep their money tied up until October. Certainly look forward to then. And how much do you shorts believe is going to be sold come Oct.? Lets see 12 million shares issued, 3 million in the market now. 9 million left. In order for the current family owners to keep control lets assume they need to retain 25% of the stock. That means 6 million more shares may enter the market. Lets assume that the price drops to $15 a share making some people VERY happy. If all of a sudden these insiders drop another 6 million into the market the stock price will drop, lets say to $10, making some people even happier. The insiders will lose around $30 million in stock value by doing this. I can't forsee anybody wanting to lose money. Sure a tidal wave of that guy sold and is driving the market down so I'd better get out now. But this is an old, respected Southern institution, and I really don't see any more than maybe 3 million shares coming into the market in October.
Back to the Future: Southeast Asian stock collapse? BANGKOK, May 16 (AFP) -
Thailand's stock exchange is rapidly falling through the floor, triggering fears in Southeast Asia that the region is heading towards another economic crisis, analysts said Monday.
"Foreign investors are deciding to completely abandon Thailand's market .... in the next six months, we'll see a major cooling off in all Southeast Asian regional markets," an analyst with a prominent foreign brokerage in Bangkok told AFP.
Tuesday's meeting of the US Federal Reserve, at which the Fed is expected to raise US interest rates by at least fifty points, may be the catalyst that converts Southeast Asia's market slide into a wholesale economic collapse.