Wednesday, July 09, 2008 12:02:39 AM
I would say that uWink has the power to capture people's imaginations about the future and hence inflate the stock price beyond what is rational. Rational = Real revenue streams as justified by current contracts in hand. How the heck did the first restaurant get to 2.50? Some people were dreaming. It definitely captured people's imaginations. Nolan is being quiet and patient. But, imagine the movie. Having Leo over for a celebrity appearance, having celebs appear regularly and endorse him, the potential is there. A small example - look up a stock with the symbol ZIXI (Zix Corporation). They are in the email encryption business (a hot topic). I watched them for a year, waited for them to break even. Could resist no longer at 1.80. Sold at 3.00. Inexplicably, they went to $5.00 - $6.00. I never did figure out why. Although their revenue growth was spectacular, they never did make money. The only thing I could fathom was that somehow they got in the news. Something to do with a bill passed by Senator Kerry that they were involved with on security. Point is, there was no rational earnings-based explanation. Similar thing could.. might... happen here.
Future revenues.. well I am a bit different than most. Some people steadfastly believe in uWink and frankly know the technology better than I do. Fearlessly averaging down. I think timing is really important because it takes time for the market to fairly price things. There are unrealized opportunities and likewise overvalued stocks. Timing has played a huge role with this one. I am a skeptic when it comes to technology companies with supposedly great products. IMO they all have a great story to tell. You just have to put a filter on it. It sounds too good to be true. Software product is a really tough business. I tend to look for something out of the ordinary in some way.. and absolute killer app. or some absolute competitive advantage (de facto standard).
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