OPEN OpenTable: Not worth its valuation....

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	David Sachdev
	Washington, DC User since Dec 2009	38
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Not worth its valuation....

I think that Mike has writen a great justification here:

http://www.prooftrader.com/symbol/OPEN/595/IPO-hangover-in-store-for-OpenTa...

And I'm not sure why this company has moved higher in this time period when the market has been in flux, but due dilligence shows that even in best case scenarios, this company is overpriced. Hopefully my timing is better, as I have picked up some August 45 puts on OPEN.

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What People Are Saying...

David Sachdev said at 7/19/10 12:48 PM Price action was $42.49 -0.75 (-1.7%)

Highlighting one of the difficulties in bringing options to a platform like prooftrader, I'm amazed at how low the options volume is here, and how great the B/A spread is. I thought that the August volume would increase as we passed options expirations, but....

David Sachdev said at 7/27/10 11:13 PM Price action was $46.50 -0.19 (-0.4%)

"Investors should also think twice about recent IPO high flyer OpenTable (Nasdaq: OPEN), which specializes in electronic restaurant reservation products. Eating out is one of the first and easiest things to knock out of a constrained budget. Investors should be leery of paying 60 times 2011's earnings for shares in a company expected to grow profit by 50% that year, especially given the possibility that analysts are overly enthusiastic about its growth prospects. OpenTable's exposure to a moribund restaurant industry seems less than appealing now."

http://www.fool.com/investing/general/2010/07/26/2-great-eats-for-your-port...

David Sachdev said at 8/2/10 2:31 PM Price action was $44.68 -0.02 (0.0%)

The thin volume on this stock worries me a bit on my options position, but I guess tomorrow is the day of reckoning for this stock, and I love that it is down on such a strong day....

David Sachdev said at 8/4/10 12:01 PM Price action was $47.53 +2.37 (+5.3%)

It seems that the only thing keeping this at these P/E levels is the fact that a single company Through various funds and llc holds most shares.

http://finance.yahoo.com/q/mh?s=OPEN+Maj...

Fidelity is the big holder here, and I think when this stock comes to earth, the small long investors are going to get screwed out of a lot of their earnings. I'd at least consider some put protection if I was long this stock because while earnings were ahead of estimates....they weren't nearly enough of a beat for the share price.

David Sachdev said at 8/4/10 1:39 PM Price action was $48.87 +3.71 (+8.2%)

Taking my hit on this coverage because I'm weary of the short squeeze in my time horizon. But wow, I can't believe that even Fidelity would want this much hot air in something they've got lots of money in....

Josh Warner-Burke said at 8/4/10 1:49 PM Price action was $48.63 +3.47 (+7.7%)

Just sort of a general comment, not about OPEN in particular... when companies IPO, they tend to go through a long period where no one's really focused on the 'bottom line' just speculating on future growth. I suppose OPEN is still in this phase.

Mike Barkett said at 8/4/10 8:35 PM Price action was $48.89 +3.73 (+8.3%)

wow, just amazing to me that people are pumping their money into this stock. It gives me hope that a clever services-based website can be worth over $1B, even if it is only going to be for a brief period. I'd love to reverse course and ride the wave, since I like the site, but I don't want to be holding the bag when the bubble pops.

David Sachdev said at 8/5/10 11:41 AM Price action was $48.53 -0.36 (-0.7%)

yeah....and the bubble is going to pop, but I may have to look at how to ride the wave safely with some strangle positions. This makes me thing of Krispy Kreme and Crocs.

I am curious to know what hardware they have in the restaurants. I'm assuming a dedicated machine that is running a pretty simple client.

David Sachdev said at 8/5/10 11:43 AM Price action was $48.53 -0.36 (-0.7%)

I should mention that strangles are going to be hard, and a bit expensive given the light, light volume. My guess is Fidelity knows they've got a hot air balloon too, otherwise they'd be looking at some sort of covered call strategy.

Mike Barkett said at 8/5/10 12:03 PM Price action was $48.55 -0.34 (-0.7%)

sometimes good earnings are the beginning of the end for a hot illiquid stock