>>>>>the stock will be worth $13.50 (and more), just not today.<<<<<
you may well be right about that. not very good at what will happen to share price in a day, a week, a month, or a year. sometimes i foolishly trade anyway and i lose more often than not when i do. dont know why i do that; might be too much time watching the market, low transaction fees, no tax implications in my ira...whatever, its dumb...for me. have done very well since 1/1/2000 with a near triple. woulda, coulda, shoulda done a lot better had i not done any spec trades.
what concerns me about ACOM are two variables:
1. i don't have a feel for the capability and integrity of the top leadership. until i do, i won't take a large stake. i tend to invest in people even before products and markets, so it is an exception for me to buy into a company before i get a good look at a few interviews and conference calls. and i can be more easily spooked out if i don't have absolute confidence in the ceo/chairman. when i believe in the leadership, it takes a bazooka to get me out of a stock.
2. would like to see revenue growth accellorate. if you are right about the slow to moderate growth, you will likely be right about the valuation and creeping inflation of the share price. my hope and expectation is that the additional capital will escalate the broadening of interest in genealogy and thus in ACOM sevices, resulting in a more compelling story.
I think that we largely agree: ACOM has a great market position that would be virtually impossible to duplicate, good product offering (I've been a customer since 2001), strong management team, they should benefit short-term from the American version of WDYTYA (much like the burst of interest in genealogy when "Roots" was published 30 years ago), and, as you pointed out, will benefit longer-term from the demographics of the aging baby boomers. However, I think that the growth is going to be solid rather than spectacular. I think that the stock will be worth $13.50 (and more), just not today.
nice informed post. i hit you a 5 star because i appreciate your analysis and important contribution to the discussion here.
but i do think you miss something very important with your comment below:
>>>>>But, most of these will be casual hobbyists (as most serious genealogists are already familiar with the product) and are unlikely to be long-term users<<<<
it is my view that we have barely scratched the surface in stimulating "serious genealogists."
1. you are right that older people are more likely to develop a passion for it. and baby boomers , who have dominated american culture for the past 60 years are getting old, thus increasing the potential pool. seems like when they start something, it sticks. for example, boomers never listened to their parents music but their own children listen to their 1950's 1960's sound.
2. Mormon culture aside, their are few cultural systemic opportunities for exposure to the category. the internet makes it much easier to trigger an interest. facebook, rather than a competitive threat, will likely have a synergistic effect IMO.
i shall repeat an earlier post which i still think contributes to the discussion which apparently no one esle has read:
Ancestry research is an absolute long term winner and if the ACOM leadership remains honorable and takes care of its customers, shareholders will realize multibagger returns. only other significant risk to a great outcome is an early seach engine buyout. If Google kmew now how big this market will become, ACOM would be gone forthwith.
ACOM has a Google like head start in the genealogy sector (Yes! that is what it will become); with effective marketing and easier access to the subject matter, this company has the opportunity to tap an enormous latent demand for ancestry research. Up to now, the addictive passion for genealogy reseach has been limited to the few who happen to have abided in a small circle that fosters exposure to family history. the internet offers that exposure to millions more people and facilitates inherent addictive inclinations of many to family history who up to now do not know how to begin.
facebook is not much of a threat but rather establishes synergy for ACOM. facebook is for connecting with the living and can stimulate more intense interest in ancestors who have passed.
genealogy is certain to grow rapidly, IMO. whether ACOM does it right and emulates jeff besos and the winning amazon.com or becomes vulnerable, weakened, and overtaken as yahoo and many others were, is a matter of ACOM managerial choice! remember, rotten leadership can botch up even a sure thing!!
ACOM, do no evil, innovate, and take care of your customers, and you may prosper beyond all expectations. as i get to know the leadership and become comfortable that they are able, shareholder friendly, and honest, i shall add to my position. on the other hand, should they turn out to be just another overpaid corrupt group of wall street execs, i shall be gone as will their legacy. this huge opportunity is ACOM's to lose.
warren buffett tells us that the best single indicator of ceo integrity is modest compensation. if they want to get rich, let them do it the Buffett way: low managerial compensation, no bonuses, no stock options. let them buy shares on the open market at the same price as the rest of us, let them risk their own capital; then let them do a good job and realize gains at the same rate as every other shareholder.
no more gouging; no more greed permitted.
Sorry, my information is from the company's S-1 and knowledge as a long-time customer. I haven't seen any article about ACOM in the NYT, but will look for it.
The company reported that their churn for the six months ended 6/30/09 was 4.1% per month. Annualized that works out to 49.2%, which is pretty close to the 50% figure that I used (I rounded). Churn is important because it indicates how "sticky" the customer base is. For ACOM they ended 2008 with 913,683 subscribers. During the next six months they added another 348,955 subscribers. Great, right? The problem is that they lost 271,679 subscribers during the same period and ended with 990,959 subscribers (so for every 5 new customers, they lost 4). This corresponds to an annual growth rate of slightly less than 17%. Not bad, but hardly barn-burning.
The "news" you're probably referring to is the long-awaited/delayed American version of the British show, "Who Do You Think You Are?". I expect that ACOM will advertise heavily and will benefit from new subscibers. But, most of these will be casual hobbyists (as most serious genealogists are already familiar with the product) and are unlikely to be long-term users. This will lead to increased churn (see above).
Again, I really like the company and product. I just think the stock is a bit rich. If you annualize the earnings for the last six months, you get a P/E multiple of around 35x. If they expect to double earnings in the next year that would be ok. Unfortunately, that's unlikely. I'd be a buyer south of $12. Long-term I expect ACOM to prosper because genealogy is already a big market and should continue to grow as the population ages (older people have the time and inclination to pursue their roots).
Just wait for the news dude. If you want to sell at 13.5 then do it. Your calculations are off, by the way. Tune into ABC...
I'd advise you to do better research instead of plagiarizing various blogs and message board posts. The 50% churn rate is a dumb arguement...not even true. I woudn't plagiarize the NYT if I were you. It will make you look like a fool.
Why is $13.50 per share cheap? The reason that the stock's not moving is that the people who bought at that price (or, worse, higher) don't like taking a loss and potential buyers think the valuation is too high. Growth is relatively modest at a CAGR of 12.7% with a churn of almost 50%. I'm a long-time customer (since 2001) and love the product, like their market position and would like to buy the stock - just not at any price. What are the comps?
this just now became available for shorting....as are all IPO'S....anyway....it'sgetting ready to move....and it's being bought at $13.50 for day's....news....and it's up couple bucks easily....gl..there will be news on this the moment it moves....i'm sure....