While “The Waterboy” is number one at the box office this week, playing just up the block on Wall Street is an altogether rather liquid event, ISDEX, up 19.9% in one week.
Yes, one week.
Fans of mountain climbing know that sometimes you don’t know how far you’ve climbed
until you look back. Looking back since November 3 ISDEX, The Internet
Stock Index, shows the most-watched Internet index up 19.9%.
Said another
way, in one week Internet stocks have done better than NASDAQ and Dow Jones
Industrials have all year.
We’re willing to write off some of it as
‘delusional exuberance,’ a preponderance of fluoride in the drinking water,
alien abductions, or Newt Gingrich resigning. But we cannot justify seeing clear to an eBay (NASDAQ:EBAY) north of 70x our estimated revenue for it next year. 70x. Let’s see the numbers.
Here’s the part
most people don’t know — fully-diluted shares basis EBAY market cap is $7
billion, or $1.8 billion you don’t see on first checking its market cap,
which is based on primary shares outstanding.
That $1.8 billion floating invisibly off Wall Street’s radar is like owning a CDnow-type firm 9 times
over outright (with a market cap of about $200 million), or owning
Onsale.com (NASDAQ:ONSL) 4.6 times over (market cap is $389 million). And
this is just EBAY’s option/warrant pool converted to share value.
The buy ratings and per share targets on EBAY we believe have set it up for a
rocketship ride that it better fuel with outstanding revenue and earnings
to sustain. If not, we all know what happens to rockets with no fuel. Don’t
get us wrong, we love eBay’s etail model. Its traders, shortsellers and
the herd bidding on its shares we believe may be ahead of themselves.
Even with its rise, EBAY shares didn’t lead the buying spree. Etail
stocks came out on top in percent gains, as investors “rediscovered”
sellers of software, PCs, and music outside the usual brand-name circle we’ve
seen with the more well-known stocks. Take a look at the list, ISDEX
November 3 – 10. What a week:
ISDEX ® | 10-Nov-98 | % change | Point change | |
The Internet Stock Index | close | from | from | |
www.isdex.com | 03-Nov-98 | 03-Nov-98 | ||
ISDEX | 205.26 | 19.9% | 34.02 | |
NASDAQ | 1,865.62 | 4.3% | 77.19 | |
DJIA | 8,863.98 | 1.8% | 157.83 | |
Egghead.com | EGGS | $13.88 | 68% | $5.63 |
N2K | NTKI | $9.31 | 60% | $3.50 |
Inktomi* | INKT | $130.13 | 56% | $46.81 |
eBay* | EBAY | $130.88 | 56% | $46.88 |
Mindspring | MSPG | $57.38 | 48% | $18.50 |
CDnow | CDNW | $12.00 | 45% | $3.75 |
Beyond.com | BYND | $15.75 | 43% | $4.75 |
Excite | XCIT | $51.63 | 35% | $13.50 |
CMG Info | CMGI | $79.25 | 32% | $19.25 |
Lycos | LCOS | $54.38 | 31% | $12.88 |
RealNetworks | RNWK | $47.75 | 29% | $10.75 |
Onsale | ONSL | $20.56 | 29% | $4.56 |
CKS Group | CKSG | $28.13 | 28% | $6.13 |
CNET | CNWK | $49.38 | 25% | $9.75 |
Yahoo! | YHOO | $176.56 | 24% | $34.44 |
PSINet | PSIX | $18.31 | 24% | $3.56 |
GeoCities* | GCTY | $42.38 | 24% | $8.13 |
Infoseek | SEEK | $36.38 | 23% | $6.75 |
USWeb | USWB | $20.25 | 22% | $3.63 |
E*TRADE | EGRP | $22.75 | 21% | $3.88 |
Netscape | NSCP | $28.13 | 19% | $4.50 |
IDT Corp | IDTC | $20.63 | 19% | $3.25 |
Verio* | VRIO | $16.88 | 18% | $2.63 |
Broadcom* | BRCM | $96.50 | 18% | $14.69 |
Verisign* | VRSN | $36.50 | 18% | $5.50 |
VocalTec | VOCLF | $10.00 | 16% | $1.38 |
Earthlink Network | ELNK | $50.06 | 16% | $6.81 |
CheckPoint Software | CHKPF | $27.38 | 15% | $3.63 |
Security Dynamics | SDTI | $13.00 | 13% | $1.50 |
Concentric | CNCX | $28.00 | 13% | $3.13 |
ISS Group* | ISSX | $35.25 | 12% | $3.81 |
@Home Network | ATHM | $48.13 | 12% | $5.13 |
Spyglass | SPYG | $16.44 | 11% | $1.56 |
Broadcast.com* | BCST | $55.25 | 11% | $5.25 |
America Online | AOL | $144.50 | 9% | $12.00 |
Open Market | OMKT | $8.56 | 9% | $0.69 |
Exodus* | EXDS | $34.63 | 7% | $2.19 |
Doubleclick | DCLK | $36.69 | 7% | $2.31 |
Network Associates | NETA | $46.56 | 6% | $2.63 |
Cisco | CSCO | $67.00 | 6% | $3.63 |
Sportsline USA | SPLN | $16.38 | 6% | $0.88 |
Amazon.Com | AMZN | $131.75 | 5% | $5.69 |
CyberCash | CYCH | $8.81 | 4% | $0.34 |
Axent | AXNT | $24.63 | 4% | $0.88 |
Network Solutions | NSOL | $67.25 | 4% | $2.38 |
Open Text | OTEXF | $13.88 | 3% | $0.38 |
Mecklermedia | MECK | $28.63 | 1% | $0.19 |
24/7 Media* | TFSM | $17.00 | -2% | -$0.38 |
Security First Technologies | SONE | $17.13 | -5% | -$0.88 |
Broadvision | BVSN | $15.38 | -12% | -$2.13 |
* change from IPO 1998 |
News behind the moves:
- 98.11.04–AOL (NYSE:AOL) takes a step closer to Netscape
(NASDAQ:NSCP) with its Digital Cities on Netcenter by providing Netcenter
Digital Cities’ local content.
- 98.11.05–CMGI (NASDAQ:CMGI) invests in startup Virtual Ink, which
allows people to share workflow over the Internet. No terms disclosed.
Another portfolio investment in CMGI’s long list that the firm
leverages with each other and with clients looking for services.
- 98.11.06–Barnes & Noble (NYSE:BKS), the sleepy giant book retail
leader, announces a $600 million deal to acquire Ingram Book Group. Terms:
$400 million stock, $200 million cash. We think Barnes, which lags
Amazon.com (NASDAQ:AMZN) on the Internet bookselling front, showed a
masterful move to acquire the food chain. Amazon relies on Ingram as one of
its main book wholesale suppliers.
The buy will give Barnes the leading
retail and wholesale place in the book selling industry, helping
to increase the speed of deliveries for books sold via barnesannoble.com. We also think that even with the buy that Ingram will
continue to support one of its biggest customers, Amazon. Once the Ingram
deal completes, Amazon will be paying Barnes for books–what a twisted tale.
- 98.11.09–Excite (NASDAQ:XCIT) adds a holiday shopping area with
faster ordering, buying and shipping designed to make the experience
easier. The area features more than two dozen retailers. Something we’ve
found astonishing is the real lack of efficient and easy-to-use shopping
sites on the Web. This seems like a good move by Excite; logical move, but
good move nonetheless. Overdue in fact.
- 98.11.09–PSINet (NASDAQ:PSIX) selects Inktomi (NASDAQ:INKT) for its cache network software that effectively speeds up network data flow by storing popular files
closer to the user. Inktomi has licensed or works with a variety of
Internet firms including
America Online, CNET, Intel, Microsoft, RealNetworks, Sun Microsystems, and
Yahoo!
- 98.11.10–ISDEX hits an all-time high, breaking 200 points for the
first time ever. We attribute this to strong reports from many analysts
(ourselves included) about holiday sales expectations driving etail stocks.
Do you use eBay? E-mail us. Tell us what you love or hate about it.
