iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
20,622 Blog Posts

Papa Putin to the Rescue

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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9 comments

  1. jazzyjeff

    So much for that faux pre-mkt pop…

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  2. TheHarper

    YHOO is a value play. plain and simple.

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  3. bood

    let’s discuss some shorts de-balling

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  4. og

    Sad if even Putin can’t save the market.

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  5. djmarcus

    Data at ~10x on ’14 rev.

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  6. jtrader

    ‘Sup with GRPN?

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  7. sloop

    I get the feeling this mark will not be happy until it gets a full 10% correction

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  8. Research Donkey

    What are the EV/Sales for those companies

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  9. TJWP

    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?

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