The $27 offering price was much too low.
The original price was 34/33, and the stock has been hammered mercilessly ever since the announcement. As you know, the company is receiving nothing for this, so they have no stake in what price the offering goes off at. I suspect the selling shareholders wanted to be sure their shares would sell so they priced them to sell. Once the market gobbled up those shares the stock was finally allowed to seek out its real price.
Since these shares do not represent dilution, and the company did not disappoint with earnings, I expect the stock to finally settle closer to the $33 mark than $27.
BTW, I got some in the follow on. They go very nicely with my IPO shares... I am happy.
You're funny. Net income is .90 per share and that is a GAAP number so treat it as real. Let's do some math...
Assuming zero growth, the company makes 3.60 in a year. Let's say current price is 61. That gives us a PE of slightly less than 17.
Consider that they guided to 50% PLUS growth, and we would actually see next years earnings at 5.40. and with a 17 PE we see $91 per share in 12 months.
I'll take it, given that those are conservative numbers.
Just curious if you are still planning to stay with this trade. The knee jerk reaction to sell is the built in response to any earnings report this quarter, but the earnings were better than expected and the guidance is higher.
Yes, it is definitely a non GAAP number, and a company like this is able to fudge on a lot of "one time items." That's why I am looking for corrections.
Maybe "color" is a better word than "corrections." ;-)
How does a company with zero earnings accumulate 2 Billion in cash and short term investments? Stop spouting GAAP... it's just another shade of grey. Cash flow is king.
Yeah, you are right. There are exceptions to every rule. When I am looking for an earnings play, I look for options with high implied volatility. This morning, the LNKD 185 puts that expire tomorrow had IV of 112%. That is huge, and even with a volatile stock like this one those puts should have been priced at 1.50 or so butt they went out at 3.05... CHA CHING!!!
The thing is when you are buying options you want to see volatility come in to the stock, and if it doesn't you get little or no profit.
When selling naked, the volatility is already there.
While your stock might have been up 8% after hours, I doubt your calls would have ever been up 200%. On earnings day, options prices are pumped up by expected volatility, and when the earnings are reported the volatility comes out of the options and prices settle lower.
I have learned to never buy options on earnings day. Only sell, even if you are selling naked.
lol, I have been writing my way to riches this week. On earnings day I wrote FB 74 puts. Next day, the stock was down but the volatility came out of the options and I covered for a 50% gain. I wrote BIDU 207.5 puts yesterday and covered today for 75% gain. Today I wrote LNKD 185s and they will probably expire worthless tomorrow.
I love writing deep out of the money puts on earnings day.
They gave guidance in the press release. "Baidu currently expects to generate total revenues in an amount ranging from RMB13.850 billion ($2.256 billion) to RMB14.250 billion ($2.322 billion) for the fourth quarter of 2014, representing a 45.4% to 49.6% year-over-year increase. This forecast reflects Baidu's current and preliminary view, which is subject to change."
Current estimates are smack in the middle of these numbers, so I wouldn't expect much unless they plan to cut expenses.
The theta decay is going to eat you alive. I am not saying it won't happen, but you will need to see the stock down $3 per day just to stay at $1. Now if it goes down $8 on Monday you might have a chance at a double.
No, 200% increase of revenue is not hyper growth. Especially not when it is only projected increase.
The call was very bullish and I am long, but I can't help but say, "Show me the money."
I'm new to the stock, and I think I like it. But seriously, hyper growth? Why would you say that?
I asked my broker the same question and I was told it typically takes 1 to 2 weeks for the transaction to be completed.
mero, 2 points...
1. It is LEE011, not LEO.
2. I hate to say it but free pointed out the potential of this compound several months ago. The information was out there.
I am not tendering.
Otsuka has offered to buy for $8.5. If they get enough shares tendered they will buy mine for 8.5. If not, they will extend the tender, Meanwhile, we have big money shareholders like Sarissa who believe this price is unfair and say they will not tender. I am on their side.
I didn't buy this company because I wanted to sell it for 8.5. Before the merger news, I thought the company was worth more, and I still do. If management is correct and the share price falls because the tender offer was dropped I am no worse than I was before the offer. I might even be in better shape as we will be able to see the results of trials. The company will continue to do its business and SGI110 will continue to garner more and more interest.
Manuso has said they will not take a drug into phase three without a partner, and I believe there will be enough interest to gain a partner. The threat that they will not have enough cash to take SGI110 through phase three is ridiculous and shows how self serving Manuso is. He is ready to retire, and he wants instant gratification.
If I can wait, he can wait.
Good post, think. This is what I am holding out for. While I don't like the trading of the last couple days, the stock continues to trade above the tender price. I still think that is a good sign. Let Otsuka and ASTX announce that the tender has resulted in a merger. At that time I can accept $8.50 for my shares or go into neverland. At that time I will take the $8.50 but I know the shares are worth more.
The point of capitalism Is that a thing is worth what someone will pay and not a penny more.
When do they have to file? According to the news report, they "boosted their stake to just under 5%." Are they trying to fly under the radar?
I am not tendering my shares. I feel certain this will go at a higher price. I am really encouraged by Aquilo buying even after they talked to management.
I agree with everything you said except for the short covering causing the above buyout pricing. With the huge volume over the past few days and the small number of short shares, it would seem that shorts could cover in an orderly process without enough demand to bump the prices.
I decided days ago to hold my shares looking for a higher priced offer, and I am curious if one might be in the offing.
I was surprised and pleased to see all of the legal announcements regarding the buyout price. There is still some play in this stock.