04
February
2005
|
13:39 PM
America/Los_Angeles

GuruNet Skyrocketing

By Richard Koman for SiliconValleyWatcher.com


GuruNet, the Israeli company behind Answers.com, bolted more than six points in trading today to 22.98. The stock price ended last week at 12.50, so it has almost doubled this week. What did Guru announce this week to make investors swoon so hard? Nothing. Here's the Motley Fool's take:



Investors would be wise to go back to the IPO prospectus and read through the risks this company faces. One significant one is that of IPO funding. While it is adequate for the next 12 months, the company is going to be producing operating losses. More funding, and probably share dilution, is coming. Oh, and the company has more debt than cash. Yikes.

The company's content is licensed from year to year. That's hardly comforting when it is the content, as well as the search, that counts.


Why is GuruNet soaring? Investors may be looking at Google's $55.6 billion market capitalization and thinking that GuruNet's Lilliputian $93 million capitalization leaves a lot of room for growth. Maybe, but Answers.com has just been released, and its future, and the company's too, are far from certain.


Link: Is Answers.com the Next Google?




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