Apparently, Putin said he’d talk about resolving the Ukraine issue. As a result, european stocks are sharply higher and US futures are indicating a +92 open for the Dow.
Back to the subject of buying internet stocks. After careful consideration, gawking at the “pin-action” in stocks like FEYE and TWTR, I’ve decided that anyone found guilty of buying these stocks should be offered the electric chair. Clearly, these people have little regard for their own money, or personal well being. I say we expedite the issue and shock them back into the graces of humanity.
How do we value these companies? What are reasonable levels to start buying? The answers are right in front of our faces, with some of the old line tech names. Let’s discuss, shall we?
We shall.
EBAY 4x sales
YHOO 8x sales (inflated due to Alibaba)
GOOG 6x sales
BIDU 10x sales
PCLN 9x sales
I think it’s fair to say the above companies have proven to be successful. While their stock prices may or may not be inflated, I believe their price to sales ratios could serve as a guideline to where some of these newer names might trade. For one, most of these newer names do not make money. However, since they’re much smaller, they deserve takeover premiums.
The average p/s ratio of the stock mentioned above is 7.4. Let’s affix a 30% premium to that and say these new “cool” stocks should be priced at around 10x sales. Fair? Now let’s look at where these stocks are trading, post meltdown.
WDAY 29x sales
TWTR 27x sales
Z 21x sales
SPLK 21x sales
GRUB 18x sales
FB 17x sales
QIHU 16x sales
YELP 16x sales
TRIP 13x sales
LNKD 11x sales
PANW 10x sales
AWAY 8x sales
OPEN 8x sales
SALE 8x sales
TRLA 7x sales
CRTO 2.9x sales
ANGI 2.4x sales
SFLY 1.8x sales
GRPN 1.8x sales
Potentially, some of these stocks have 60% further downside–if we’re gonna go all the way. Other names are within reasonable valuations and can be accumulated, if you’re into that sort of thing. The danger lies most in the names trading above 10x sales.
All that aside, it looks like a bounce this morning. I am sure it will last for a solid 15 to 20 minutes before selling off in horrific fashion.
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So much for that faux pre-mkt pop…
YHOO is a value play. plain and simple.
let’s discuss some shorts de-balling
Sad if even Putin can’t save the market.
Data at ~10x on ’14 rev.
‘Sup with GRPN?
I get the feeling this mark will not be happy until it gets a full 10% correction
What are the EV/Sales for those companies
Isn’t P/S only relevant if eventually you can stop losing money to generate those sales? And isn’t assuming that will happen a bit of a stretch, at least for some of these companies, as it may take years and no one knows what the competitive landscape will look like then?