If you have followed the saga of NetBank (PinkSheets:NTBK), this has been a long slow death. We’ve been reviewing this on and off for some time and never with anything positive, at least not in years. This looked like a classic situation of a financial company masquerading as a dot.bomb turning into a flameout.
On July 26, 2007, back when we were just deemed as petty emerging bloggers, I wrote a piece about how this one was stinking up the room when shares were around $5.50. I had actually been covering this one negatively at one of the predecessor operations prior to 24/7 Wall St. since 2003 or 2004 because of how the company was being run and how it looked like it had a tsunami headed straight at it. They would have made a great asset and could have become part of a much larger company at one point, but that was way back when and is now ancient history. The yield boost they were offering on CD’s compared to traditional banks was eating their financials inside out.
In late January 2007 I also looked at this on a review because Citigroup was acquiring Egg as an online counterpart in the U.K. Unfortunately NetBank was ugly on a relative value basis then and the fundamentals weren’t getting better. They were dying on the vine and divine intervention looked like its only hope. Shares were around $3.80 then, and heading lower.
This one was hitting our 52-week lows screens all the time and we noted again in May how one analyst had even said the company was worth nothing.
The truth is very few traders stay short stocks once these get to such incredibly low stock prices, even after privately-held EverBank decided to cancel its vulture offer for the company’s assets. Even though this one is dying on the vine the risks of shorting down at $0.08 or even higher are just too big. If anyone really does surface with anything whatsoever this one could pop exponentially from current levels. It won’t make that move on its own because this one would be on f’dcompany.com if it was still around.
There is just really no value in the company. The website NetBank.com is still up and you have to wonder who in their right mind would still be with them. The home page shows pictures pictures of people smiling looking down at their PDA, but those are either short sellers or are competitors.
Now it seems the only bet will be if they can remain alive even on the dreaded pink sheets. It is always possible that dead birds rise out of the ashes as a Phoenix, but the only time we’ve ever seen it is in drawing in mythology books.
Jon C. Ogg
September 28, 2007
Jon Ogg can be reached at firstname.lastname@example.org; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.