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Posted 7 months, 10 days ago. http://www.timothysykes.com/admin/2007/12/16/you-should-care-only-about-stock-performance-not-revenue-growth/

You Should Care Only About Stock Performance, Not Revenue Growth

Tags: TIM Lessons

Since I’m about to start writing for AOL’s BloggingStocks.com, I’ve started reading some of the articles posted there. I’m not surprised to see a whole bunch of BullShip! Take for example this interview with IncrediMail’s (Nasdaq: MAIL) CEO. I won’t go into the details(because that’d give off the impression I actually care about this pathetic little company)—instead, let’s focus on this one quote:
“…Profitability will come. As I said, our focus is on revenue growth…”

OK, I understand, you’re trying to build a long-term business, you gotta invest in R&D, make deals that take time to ramp, etc, etc, but c’mon—profitability will come—that’s messed up! Is it any wonder your stock is right at a 52-week low, even as revenues are growing in excess of 75%? Is it any wonder that if I had a longer time horizon, I’d be much more likely to short this stock rather than buy it?

There are two lessons here: one for corporate management and one for investors.

TIM Lesson for Corporate Management: Hey, idiots, when you’re a publicly traded company, your long term vision, short-term profit sacrifice blah blah doesn’t matter! You build your business into a profitable machine, so your shareholders will be happy and won’t get rid of you.

TIM Lessons for Investors: Never buy into any company’s story, buy into a stock’s performance. When you buy into a stock and it doesn’t perform, you get out—there’s plenty of other stocks out there that are performing NOW.

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One Response

  1. 1tim

    February 3rd, 2008 at 3:33 pm

    After this interview and my blog post came out, MAIL announced Google has kicked them off AdSense and the stock tanked to under $3. Google then reinstated them–probly as a result of a lot of begging and/or a change in ad policy–but the stock is still at $3.70. NEVER BUY INTO DOWNTRENDING STOCKS, NO MATTER WHAT THE CEO OR ANYBODY ELSE SAYS

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