Wednesday, August 8, 2007

LookSmart Ltd.

LookSmart Ltd. is a NASDAQ listed security that has been trading in a range between $2.32 and $5.45 over the past year. With 22,896,860 shares outstanding, a recent price of $2.45 gives a total market capitalization of $58,615,960. While there are certainly larger companies, LookSmart Ltd. has definitely earned its place in the pack. Last year, LookSmart Ltd. created $-0.55 in earnings for every share outstanding.

LookSmart Ltd. is currently priced by the market at 0.00 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, LookSmart Ltd. is unlikely to be an interesting value proposition. Consistent earnings are the key to high valuations and this security is not on its way.


Anonymous said...

Your analysis did not take in to account the recent signing of Wikia as a licensee of the Looksmart AdCenter. In the press release it was noted that LOOK would also provide display as well.
I believe at the current price makes the stock an attractive buy.
I also note you did not mention of that 58 mil. market cap 28 mil. is cash and they carry zero debt.
pretty cheap when you consider start-ups with no revenues are gifted milions by angel and VC money.