OpenTable (OPEN) reported last evening, and it appears to be the latest stock (in a now crowded line) to enjoy a "Riverbed day" - it is opening in the +15% range, and appears to be the new Netflix (NFLX). So to answer my question from last month [Sep 16, 2010: Does One Dare Short OpenTable?] - the answer is "at your own peril".
- OpenTable Inc (OPEN) the restaurant reservation platform, reported a higher third-quarter profit that topped Wall Street estimates as more restaurants used its services. The San Francisco-based company reported a net profit of $3.8 million, or 16 cents a share, compared with $896,000, or 4 cents a share, a year ago. Excluding items, the company earned 23 cents a share.
- Revenue rose 44 percent to $24.5 million.
- Analysts had expected a profit of 15 cents a share, excluding exceptionals, on revenue of $23.2 million, according to Thomson Reuters I/B/E/S.
- The company's installed restaurant base as of Sept. 30 was up 31 percent at 15,246, and seated diners jumped 54 percent to 15.9 million.
- The company generates substantially all of its revenue from its restaurant customers. OpenTable's revenue includes monthly subscription fees and a fee for each restaurant guest seated through online reservations.
- OpenTable has more than doubled in value this year.
If you are keeping track at home this company is on pace for about $100M in annual revenue (simply extrapolating this quarter's revenue x 4). That is not trailing 4 quarter revenue which is materially lower. OPEN's market valuation is currently in the $1.6B arena.... that is 16x forward 'my extrapolated sales'.
That type of valuation is is
censored for blood pressure.... well, don't worry about it. Just buy stocks. (I feel for Whitney Tilson who is short both NFLX and OPEN - he apparently still uses logic)
About the author:
Trader MarkMark's equity focus is identifying secular growth trends, and the companies most likely to benefit from these macro trends. Stocks are identified through fundamental analysis, although basic technical analysis is used in determining entry and exit points. With a degree in Economics from the University of Michigan, a broader understanding of the economy as a whole, along with interpreting investor psychology is also a major interest for Mark. His career background has focused on financial analysis in corporate America. Visit Mark's website at http://www.fundmymutualfund.com/