The MySpace factor
While everyone is talking about Google (GOOG) and YouTube, I would like to bring your attention to News Corp (NWS) and MySpace.
First lets consider what News Corp was before the buyout – an old media conglomerate with the lowest ranked of the big 4 networks (Fox), a second stream newspaper (New York Post), a low margin cut throat business in Direct TV and a string of other successful but far from their prime businesses.
With the acquisition of MySpace over a year ago, News Corp made perhaps the single best investment that could have been made by a media company. They paid a mere $580 million for MySpace which pales in comparison to what Google just paid for YouTube. With anywhere from 20 million to 43 million “active” members (some even whisper 100 million but thats just ludicrous), the News Corp/MySpace relationship resembles the one between Time Warner/AOL – except that MySpace has an exclusive relationship with Google (and now YouTube) and most MySpace users are impressionable teens and twentysomethings.
With analysts touting MySpace’s value to be anywhere from $15-20 billion in 3-5 years, this is surely not reflected in the News Corp stock price, which has gone up from about $17.50 to $21.50 since the acquisition. That is a mere 23% gain in almost 15 months. I believe NWS is undervalued at these levels and I recommend buying the stock under 22.
– Faisal Laljee
you believe value of My Space
will ballon to $15 – $20 Billion,
quite a creative and optimistic
financial forcast.
what is concrete premise(s) or
drivers, if any?
Optimistic yes. Creative no. And remember, I mentioned specifically that a “bunch of analysts are touting” about the potential value of MySpace. I just don’t disagree with them. Can you blame me considering Google is worth $130 billion and there are 6-12 month price targets that if true, will take it to $155 billion soon.
yeah maybe your right.
News Corp bought a jewel.
I remember when MySpace was
publically traded in late 2004
and was unable to figure out
what the driver was. then
in a flash News bought them out. such a tricky game this stock market is.
Mad Money J.C. says Time-Warner is in play as they split off all the divisions and focus
on the cable bundled triple play. says $17s-18s shares are a buy worth $25-ish near term if restructure takes place.
Cramer has been bullish on Time Warner since 2003 (if not earlier than that). Until TWX sheds AOL, I am not interested in it.
– Faisal Laljee