I am going to take the other side of this trade and sell into this strength. I am bringing Gmarket (GMKT) down to only a 100 share holding. In the current mania for all things Asian this stock might go to $50 for all I know, but these analyst comments from last Friday spooked me.
Why listen to analysts? Usually I take everything they say with a major grain of salt. HOWEVER, they are a very conservative type of people. They tend to group think and they all tend to copy each other. It takes a lot of risk to stand out from the crowd because if you are wrong - you will look really bad. At least if you stand with your peers and you are all bullish, and a company falters than you don't look as bad, since all your peers (fellow analysts) were also wrong. So making a stand right before earnings like Goldman and RBC did means they must have some seriously good feeling/information that Gmarket results might not be quite so good as anticipated. In my own experience when analysts have come out bearish a week ahead of earnings it usually has always meant something poor in the numbers.
With that said, in a mania like we are in now - just having the word China, Asia, Asian, Oriental, or anything of the like seems to add 70% to value - it makes little sense but this is the current speculation. So investors could overlook any near term weakness and say "this is going to be the Ebay of China" (when in fact Gmarket is in South Korea) - but details like that don't matter in a mania. Because they "COULD" be in China in the future and thats 1.3 billion Asian Ebayers of course which means Gmarket should be $5000, not $20. That's the current 'reasoning' on the street the past 3-4 weeks.
I love this stock at $20, I like it in the low $20s, but as it approaches $30 I will leave it to the speculators and look for a better entry if it pulls back. Again, this does not mean rampant speculation for all things Asian cannot take the stock to $50; I mean if Baidu.com is worth $350 why not Gmarket at $150. It's all detached from reality at this point so whats a few more hundred on the stock price at this point. All Gmarket needs now is a mention from Cramer...
But I have to stick to common sense, and keep on plan. Not that it matters but Gmarket now trades at 40x 2007 estimates and 32x 2008 estimates.
Long Gmarket in fund; no personal position
