Monster WorldWide stock (MWW) is overpriced

So Monster Worldwide, the company we all started posting our resumes to when we started our careers, is back with a bang or so it seems as per the last trading session. One look at their revenues and its a sad story. Stock peaked in 2007 and has been down ever since. Monster in it's best days made revenues of 1.35 Billion and profits of 146 million. They some how kept up the act in 2008 but made lesser profit and in 2009 they collapsed due to the poor job market and poor demand. Q3 has been good and Q4 has been another 25% growth yoy.

Recovery looks good but is expected. What I don't expect is for Monster to have the same growth rate as they once did after all their business recovers this year. Next year will continue to be challenging because of the tight competition that LinkedIn is offering. So while monster's stock collapsed, linked in more than doubled to 2.4 billion in the secondary pre-ipo markets because it is straight up a better product, a more web 2.0 experience and is a fantastic site to browse and navigate. While monster has tried to bring a web 2.0 look and feel, their website is still unfriendly to users, their products seem all over the place without any focus and they will continue to lose market share to companies such as LinkedIn. At a recent conference I went to for Payments companies, almost each recruiting head said Monster is passe and LinkedIn is the way to go.

Let's do some numbers. Say MWW recovers the business they lost in 2009, they will be at a 1.2 Billion run rate for next year given they aren't fully recovering and job market is still weak. Profitability is still off. There is no way to price the stock if you remove the 25% growth they got this year from next year's expectations. I don't understand why expenses have to be so high quite frankly so I guess that will need some more research. The short ratio is at 17% and so you can't really expect some great short covering rally.

My 2 cents is get in with a short or a put after waiting for three days. Why? Because I like to see big moves play out and you are always too early on a short after a big move where you were convinced this will head back down. If it goes below 17, wait for it to come back up. If it any time it goes back to mid 18's or 19, short it. The reward on this will be next year more so than this year. Also, MWW short can be a great part of your hedging strategy, so keep that angle in mind.