RIMM and CROX

[Wreck_IT]

These stocks are acting really weird. Both are overvalued and have huge short interest, however they continue to go up. Shorts getting squeezed is all I can think of.....

[The Little Giants]

Just wondering why you see RIMM as overvalued? Or did you just mean overbought here?

[pdpwaterboy]

I can tell you what i think about overvalued stocks.

You're welcome to let me know if my thought is wrong...seriously...i will need some helps.

Lets take CROX's financial data for example:
1) The balance sheet as of 6/30/2007
Total Asset = $452M
Total Liability = $130M
Total Equity = $322M => Net Tangible Assets = $280M

2) At this surface, in simple english, I interprete this as a person has $452 in cash, owes credit card $130, minus everything else, net asset for this person is $280

3) Stock price is at $67/share and they have 81.55M shares outstanding.
Therefore the company is worth $5.46Billion. You can get this market cap # from "http://finance.yahoo.com/q?s=CROX"

4) You telling me that if you pay me $5.46billion for my $280Million, i would not sell you my company?

That's overvalued.

Now, there are other intangible factors such as hot products, emotional investors, economic situation that will affect the stock price. But as a pure finance person, I will side with the Directors and sell the stocks.

Why hold paper gain when you can capitalize on it?

[The Little Giants]

I asked you about RIMM not CROX tho.

[pdpwaterboy]

sorry...

I use the same concept for my valuation purpose. I have not done any lookup on RIMM.

I should have touched it when it was in the lawsuit

[The Little Giants]

RIMM and CROX are two totally different cases. RIMM will be a market leader for a long time to come.

[pdpwaterboy]

agree...don't have FAD products is the key for any overpaid stock.

As long as there are demands for sales, their revenues will grow and people are buying the stocks on the potentials.

[The Little Giants]

See what I was talking about?