You want to see a pop in this stock, wait until
they beat the projected earnings.
Hmmm, if they
just meet the street they increased earnings by over
The name of the game buy low and sell high, well
we�ve lost over 80 points, I�m willing to take the
chance that AOL will be at it�s new highs within the
next two years. Than I can double my money and start
over again on another board where the sky is falling
forever. Come on people, 17 dollars a share for a company
that�s growing faster than CSCO, MSFT, DELL. This is the
staple food of the internet. The simple fact is they�ve
just started to grow, wait until they touch the rest
of the world, the US is small in comparison.
You would be correct if AOL was a traditional
blue-chip company. But AOL is not a "traditional blue-chip
company, it's a high-growth company. High-growth companies
carry higher PE multiples because of their high-growth.
Look at Cisco which is trading at a PE ratio of
The expected annual earnings rate (per the analysts)
for AOL for the next five years is 50.8%. The current
EPS number is .35$.
If you take .35$ multiplied by
50.8% five times you get an EPS of $2.73 in five years.
I take 5 years because AOL is a long-term
Let's say AOL should have a PE ratio of 95 (I chose
this since Cisco has this current PE number). If you
take 95 times $2.73 you get a fair AOL price in 3-4
years of $259. If you can triple your money in 3 years,
I say do it.
People shouldn't invest in a
company such as AOL unless they know what they are doing.
But once you, you'll realize it's a potentially
oustanding, albeit risky investment.
from this weeks
America Online (AOL) provides Internet online
such as electronic mail, conferencing, software,
interactive magazines and
newspapers, and online classes, as well
as access to
services of the Internet. For the nine months ended
3/31/99, total revenues rose 58% to $3.4 billion. Net
$618 million vs. a net loss of $80
million. Revenues reflect increased
advertising on AOL
service and higher commerce fees. Earnings
gains from the sale of Excite investments.
is the undisputed leader in dial-up service to the
Internet with its
16 million subscribers. The next
closest services are EarthLink
Network Inc. and
MindSpring Enterprises Inc. AT&T seems more
in concentrating on its core telephone business.
Network, also, is focusing on other segments.
Even though two-thirds
of America has yet to get
online from home.
Although we were positive on
the stock no more than 45 days
overseas developments have suddenly changed
business model. Internet access is being given away
free. AOL, which charge premium monthly fees (over $20
dollars), now finds itself with the sudden
possibility of losing
this annuity type revenue.
The-Adviser.com is exclusively
reporting that AOL is
considering a very aggressive price
cutting strategy to
thwart customer losses and maintain
I'm not a short and I was once on long. I rode a
wild ride on this stock for many years. AOL has done
me well but I dumped it about 2 months ago when I
felt that it was just so overvalued it was ridiculous
to buy. I still think it is very much overvalued and
investors that have been trained to buy on the dips are
going to get screwed. Stocks do not, in general, go up
hundreds of percent a year and this Internet craze will
end just as fast as it began. Not to say AOL is not a
good company, nor that the internet is bad and all the
companies in it are going to fail. Just that many of the
names investors have placed so much faith in will not
be there several years from now and the ones that
will be there have already taken into account 3-6
years of earnings. AOL will be a market leader for many
more years to come and it will need to because it's
earnings and growth have a long way to go to catch up with
it's current valuation. .com does not make a stock
valuable nor does name recognation, but if your paying
200-300x earnings or anything insane like that then your
going to get burned. Just a warning play as you like
after all it's your money. Just don't bitch when you
get a margin call or lose 80% of your holding.