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  • OpenTable Inc. (OPEN) Q3 2010 Update

    1)    The Q3 effective tax rate was 17%–without which EPS does not beat (it was 39% in Q2). It certainly helps to have lower taxes. If you consider greater shareholder dilution and tax adjust EPS, income only rose $0.006 per share from last quarter. 

    2)    Revenue beat of $1.2M (~5%) on a $1.6B market cap company is insignificant. 

    3)    Although the number of seated diners was up 54% and its installed restaurant base increased 31%, average monthly pricing declined  YOY in US from $268 to $252 and average  international subscription revenue  declined from $204 to $171.

    4)     Although the number of installed restaurants is increasing, it is clear that the subscription revenue per restaurant is consistently lower every quarter.

    5)    OpenTable still sells for more than 100 times this year’s expected earnings, and 17 times estimated sales. Such multiples leave little room for missteps, even as the competition grows.

     As some say, playing musical chair is all great and fun while the music is playing, but the fun always ends when the music stops. It will not take a day or a month, but eventually, Opentable’s music will stop, and my guess is that investors will be late at realizing this.

    Disclosure: No Positions
    Tags: OPEN
    Nov 03 9:43 AM | Link | Comment!
  • Common Sense Investing: The Papers of Benjamin Graham

    It took me over a year to do this, but after many trips to the NYC research library I’ve finally compiled over 40 papers originally written by Benjamin Graham into an easy-to-read book format. These papers are not part of either Intelligent Investor nor Security Analysis. The papers range from 1930 to 1974, basically Ben Graham’s entire professional life. Enjoy!

    Tags: BRK.A, BRK.B, LUK
    Oct 31 4:20 PM | Link | 1 Comment
  • Short Idea: OpenTable (OPEN)
    If there is one absurdly overvalued stock in the market right now, then OpenTable is it.

    Disclosure: No position
    Tags: OPEN
    Oct 26 2:27 PM | Link | Comment!
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