Did the E*Trade Baby Pay Off? 19 comments
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Everyone’s favorite investor in diapers is back as the E*Trade (ETFC) Baby makes a new appearance promoting Mobile E*Trade Pro. By now I’m sure most of us have seen those popular E*TRADE Baby advertisements either on television or online. There are now three ads with the mobile variation joining the E*Trade Banking Baby and E*Trade Trading Baby. The previous versions have both gained over a million views on YouTube since the first release during this year’s Super Bowl.
While airing a Super Bowl advertisement likely increases awareness for each advertiser, there is the inevitable debate over whether Super Bowl ads really pay off in terms of actual revenue. In the case of E*Trade, the question is whether the company managed to attract new customers post-airing of the Baby ads.
We first looked into how E*Trade has performed in terms of site traffic to its home page since launching the Super Bowl ad. Although the advertisements received great reviews, the campaigns did not result in increased traffic to etrade.com. Below we see that in February and March of 2008, visitors to E*Trade actually decreased 10% compared to February 2008. What makes this decline even more interesting is the fact that in January traffic increased 4% over the previous month. The subsequent decline continued into April by a modest 3%.
While on the surface it may look as if the ad campaign was not effective for E*Trade, one has to look deeper to see the real story. The idea of quality over quantity comes into play here. While monthly site traffic to etrade.com decreased after the E*Trade Baby made his first appearance, the quality of the traffic increased greatly. Below is a measure of velocity at etrade.com using the Super Bowl (February 3, 2008) as the starting point. Velocity measures the attention (or time spent on a site) and how it changes compared to one point in time. For example, during the first few days after the Super Bowl, attention increased nearly 200% at etrade.com. This shows that even though fewer people were going to etrade.com, those that did visit were spending more time engaging with the site than people that visited prior to the big game.
In the modern era all too often we see trendy Super Bowl ads that might be a hit with the public, but do not generate results on the bottom line. If someone were to look just at the traffic for E*Trade they might think this is another example of such a flop. By looking at the bigger picture however, it is apparent that the campaign was successful when it came to getting people more engaged with the brand which is a win in my book. E*Trade certainly seems happy with the results since they are willing to invest more in having this wise cracking infant be their public face.
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This article has 19 comments:
Their May daily average revenue trades are up over 9% from last year's May and retail accounts are up about 4% this may also.
www.nasdaq.com/earning...
At a PE of 15 that gives you $16.20.
But this a low-ball estimate as ETFC is paying down their debt at an accelerated rate and this estimate also understates ETFC’s true growth potential as being the best on-line trading platform hands-down.
$1.08/share could easily double by 2011.
Now you’re looking at a $32.40 share price, or least something in between $16.20 - $32.40.
This target will be reached before 2011, of course, as the market tends to race to true valuations prior to actual earnings materializing.
Also AMTD & other companies interested in acquiring ETFC are well aware of how rapidly ETFC share price is going to appreciate and have a vested interest in naked shorting the crap out of the stock down to levels that would make a cheap buyout offer appear reasonable.
(THIS HAPPENS ALL THE TIME)
So either way, short-term ETFC gets acquired for a decent return for shareholders, ($8.00 - $12.00) or she doesn’t get bought and appreciates on her own upwards toward $16.00 - $32.00 over the next 18 - 24 month.
The naked shorties know what this company is going to be worth and they want as many of your shares as they can possibly scrounge.
The new management appears to be credible and using the time wisely to offload non-core businesses, reduce debt, set put in place a sound plan for long term growth. These are good reasons to be optimistic on their stock over the long term.
Two reasons to be cautious in the near term. First, the pain from the poor investements in mortgages continues to hurt the economy overall and E*Trade in particular (Though the stock has been devalued considerable to reflect this already). Second, E*Trade has become a poster-child for the impact of the sub-prime fiasco. This leads investors to be very leery about adding it to their portfolio. "Once bitten, twice shy" is a wise moto for some.
For me, I see a young thorough bred recovering from a bad wound. It is healing, but still limping. It hasn't gone down to the wolves, but many still have the smell of blood in their noses.
All in all, I am cautiously optimistic. $16 - $32 seems very optimistic right now. But, if the company can keep with the game plan, then it may become a poster child for turn around and patience.
I expect E*Trade to survive and even to see $5-$8 by the end of the year if all continues smothly and there is no further "major" write offs associated with mortage investments. The low end, requires only a continuation of the current core growth and reasonable dealing of currently recognized problems. The high end requires some stronger growth and for the economy not to make the sub prime situation sigificantly worse than it already is.
Long and proud!
Here is something I found regarding some Mutual Funds.
thebuylist.com/default...
thebuylist.com/default...
PJ568 is corect topoint to unknowns. Further loan loses and dilution are certainly likely over the next 6-12. However, they need not be major compared to the writedown in stock value already seen.
I am long (in a portfolio dominated by cash and bonds since August-October last year). I recognize that it is a risky and volitile stock, but the potential upside is significant if they can complete the turn around. The people that have come in are solid, no fruits, nuts or flakes and their plan is a good one and, so far, being well executed. That they are not saying a lot is reassuring to me, as I prefer managers who persaude with actions rather than words.
The naked shorties are gonna get spanked hard sooner or later.
Once the credit crunch results are clearer this company could jump quickly so keep it on your watch list for a sunny day.. while you're at it I would add JPM as well, who seem to keep getting punished with the sector but lets not forget, they have all of Bear Sterns (R.I.P) assets just waiting to pay off..
Invest now and let's all be happy together in the near future...
E-trade= 10/share by Jan 2009
www.nasdaq.com/earning...
At a PE of 15 that gives you $16.20.
But this a low-ball estimate as ETFC is paying down their debt at an accelerated rate and this estimate also understates ETFC’s true growth potential as being the best on-line trading platform hands-down.
$1.08/share could easily double by 2011.
Now you’re looking at a $32.40 share price, or least something in between $16.20 - $32.40.
This target will be reached before 2011, of course, as the market tends to race to true valuations prior to actual earnings materializing.
Also AMTD & other companies interested in acquiring ETFC are well aware of how rapidly ETFC share price is going to appreciate and have a vested interest in naked shorting the crap out of the stock down to levels that would make a cheap buyout offer appear reasonable.
(THIS HAPPENS ALL THE TIME)
So either way, short-term ETFC gets acquired for a decent return for shareholders, ($8.00 - $12.00) or she doesn’t get bought and appreciates on her own upwards toward $16.00 - $32.00 over the next 18 - 24 month.
The naked shorties know what this company is going to be worth and they want as many of your shares as they can possibly scrounge.