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Pink slips are starting to appear at Internet content businesses, and investors are fleeing in droves. So what does media mogul and New Republic owner Martin Peretz do in response? Pump more cash into his beleaguered dot-com, financial news site TheStreet.com.
As news of the carnage at Salon.com, APB.com, and Oxygen Media roiled the fourth estate over the last few weeks, Peretz sailed straight into the ill wind. He coughed up about $700,000 to purchase 101,000 shares of TheStreet at prices ranging from $6.79 to $7.75. “The stock is laughably undervalued. I'm a believer," says Peretz, who now holds a 3.1million-share stake worth $23 million in the company he founded with hedge-fund manager and opinionated columnist, James C. Cramer.
How much does Peretz believe? Enough to let his family purchase an additional 50,000 to 60,000 shares on their own (Peretz did not disclose the exact number). What's more, Peretz says he would have bought the stock at even higher prices but was prevented from doing so by stringent Securities & Exchange Commission regulations limiting the time periods when directors of companies are allowed to buy in. And he says he'll continue to buy even if the stock goes up.
"WE WILL NOT SELL."
Does Peretz know something Wall Street doesn't? Maybe. TheStreet.com's stock crept up 5.4%, to 7 5/16, on June 9, and volume more than doubled to 89,000 shares traded from the previous day. But does he have any real basis for optimism? Peretz points to last quarter's numbers, which showed a 187% increase in revenues year-over-year and a 445% increase in unique visitor traffic to TheStreet.com.
Furthermore, Peretz says TheStreet now has a solid management team installed, and turnover in the editorial staff has ended. Peretz says he likes the new team even better. As for the persistent acquisition rumors, Peretz says, "We certainly will not sell this company at anything near the current valuation."
Indeed, investors have suffered much at the hands of the currrent valuation, which rides nearly 80% below the company's 52-week high of $36. That said, some analysts agree with Peretz. Thomas Weisel Partners reiterated a strong buy rating on the stock on May 18, with a 12-month target price of $35.
LINGERING READERS.
But first TheStreet may have to increase traffic. According to PCData, the company snagged 923,000 unique visitors in May. That lagged far behind archrival CBSMarketWatch, which tallied more than 3 million unique visitors during the month. Still, PCData says visitors to TheStreet.com stay three times as long as those that go to Marketwatch.
If Peretz & Co. can keep these numbers moving in the right direction, other investors may start putting their money where his mouth -- and his money -- is.
Copyright 2000 , by The McGraw-Hill Companies Inc. All rights reserved.
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