From early oct to early dec, the nasdaq gained 50%, while Avid doubled in price. The nas is just an average of course, but I still can't help but wonder why Avid out-performed the index over this short period. If the answer is momentum, fine, we've all witnessed this before. However, it would also mean a correction, perhaps a substantial one, is coming.
My concern is that there is something positive going on that has substance to it and that is Avid specific.
I've read some more comments here and my guess is that no one shorted this stock while the overall market was moving up. To do so would be foolish and I have to say, the notorious sugarr_daddy sounds quite smart, although immature. Just an observation, not an attack.
I like the short arguments better than the long ones for now.
Early 2003 will be interesting.
I'd still like to know more about Avid's acquisition and the substantial number of stock options management must be poised to execute and unload. The options alone could spark a 30% sell-off.
Day late but never a dollar short. Very good observation. #1 rule is do not fall in love with a stock. AVID is a perfect short at this time. If you are holding for the long you can still play the game without sacrficing your holdings. Stocks are just that. A game.
I think most of the people here have covered thier bets buy selling a portion in the 20-21 range, thats what i did as this has been a lucrative run. But there is more to understanding if a stock is ready to crash than just the numbers. I have heard all of the "numbers according to sugarr" and while sugarr obviously knows what he is doing in the market, when you get into niche markets that you do not understand you can be burnt by appearence.
1. The p/e is skewed big time due to the bad numbers for Q1. I believe that was a hiccup based on the channel checking I have done.
2. Avid trully has a "killer app" in Unity. This product has really come into its own over the last year, so much so that broadcasters all over the world are buying complete Avid newsrooms ($3-$20M a pop) based on the high reliability and SPECIFIC funtionality to the news market. Avid has been making its money on $20-50K editors to this point so this is a huge business infux for them.There are some riks though...they need to be able to SUPPORT these instalations to keep the orders coming. Support is huge to bcsters and they will close the wallet if they are not being supported. Again, from what I hear Avid has really stepped up to the plate program managing these big deals and customers are happy.
3.Because they are a high tech growth company they have always traded a little high...but IMO rightfully so as I beleive they could become VERY profitable over the next 5 years...it has already started if you look at the trend for revenues and earnings.
4. My belief is that this stock has been undervalued since 9/11. They are one of a very few players in a very lucrative market, They have the luxury of being everywhere which essentialy gives them "first shot" at any new tecnology that comes along in the marketplace. It is even more of a hook when you realize that all of Avids products are designed to work together. For a competitor to convince a newsroom to boot Avid and buy thier new product in the "shared storage" space for instance, they have to prove they are better in the editor,effects,playback,newsroom control, etc,etc,etc products as well. That is not to say that Avid is strictly proprietary with thier solutions because they do infact sell specific products into a newsroom/edit suite with other gear, but Avid is clearly the best at what they do and it is very difficult to convince artists who are accustomed to a set of tools that work great together to change.
This gives Avid a nice advantage on rolling out equipment chnges in technology in this market. This advantage is real and why I believe Avid is in a position to continue to grow the business and profits.