does a 30c valuation really sound unreasonable, page-77

Miranda,

I've called the company and it fully confirmed my scepticism of this legendary GCN story. Which other company's management asks how many shares you hold. Then tells you that you should buy and hold onto your stock because you'd do 'quite well'. He then said that he owned 70 million shares himself and that it was his retirement fund. On the surface, it simply looks like hot air.

At the end of the day, just ask yourself whether you think GCN is worth 300 million. If you think it is, justify it by forecasting future revenue streams, i.e. 15-30 million a year in NPAT. Do you think GCN is better than DTL, MLB, BGL, etc. All tech companies which have established strong revenue streams. At 300 million, GCN will be twice as big as DTL, three times as big as MLB and eight times as big as BGL?

You are thinking that the P1/GCN JV will have millions of subscribers. Really? I wish it was that easy, then we'd all start up some internet company. Get 1 million subscribers without difficulty and get them to buy our products, whilst receiving advertising revenue. Also, the WiFi seems like a big deal to most. 700000 commuters go through Flinders Station every week. Sure, why not? It could be 20 million. Question is, what proportion of these people will actually use the Netbay / GCN free Wifi? 5% if you're lucky? You need to realise that not every commuter is on their phone surfing the web. Then you need to realise that most commuters use their mobile phone provider's 3G service. What are the click-through rates for the users?

There is absolutely NO way that GCN should be valued at these incredible predictions being thrown around (20-30c by Christmas). It is very rare for internet companies to become overnight sensations unless you are Facebook or Groupon. You shouldn't be interested in a P1 valuation of 30c, rather you should be interested in a P1 valuation of circa $300 million.

I don't think the valuation is coming out. But in the event it does and it spikes to 20-30c, any holders should definitely sell immediately to capitalise on the market's lunacy.

P.S. Someone claimed that down-rampers simply wanted to make money. False, I am interested in shares of any kind. I enjoy thinking about why share prices behave the way they do and I am providing my opinion.