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Devoish - Rosetta Stone just went public, are you buying?



April 16, 2009 – Comments (9)

I did a CAPS search for Rosetta Stone to see if the stock could be rated yet. As far as I can tell, it can't. I did however find a blog in which Devoish mentioned a desire to invest in the company if it ever went public. It soared more than 40% in its first day of trading.

9 Comments – Post Your Own

#1) On April 16, 2009 at 3:42 PM, abitare (30.08) wrote:

Time to sell! Language sortware is free

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#2) On April 16, 2009 at 3:55 PM, JGus (28.21) wrote:

That was one of my first thoughts...especially in an environment where most people don't have money lying around to invest in language software.

I actually looked it up because when I saw that it shot up 40% today, I thought it would be a good red-thumb candidate. I was curious to see why Devoish thought the company would make a good investment.

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#3) On April 16, 2009 at 4:08 PM, motleyanimal (38.57) wrote:

I got one of those courses just to learn enough Spanish to understand the garden guys who take care of the front lawn. And also, I was fairly certain that "el hombre blanco, gordo y estúpido" was probably not a compliment.

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#4) On April 16, 2009 at 4:35 PM, JGus (28.21) wrote:



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#5) On April 16, 2009 at 5:19 PM, devoish (76.27) wrote:

I didn't know. Let me go look at the prospectus.

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#6) On April 16, 2009 at 5:30 PM, goldminingXpert (28.80) wrote:

Investors are going to get "Rosetta Stoned" if they buy this.

Long live Tool.

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#7) On April 16, 2009 at 9:22 PM, devoish (76.27) wrote:

I am told the product is excellent, which is what captured my interest a year and a half ago.

For a very expensive product there is very little earnings going to shareholders. The IPO price was a 10 p/e against ttm, now we are at 15. There growth has been outstanding up to 2008, but there are questions about restating 2006 earnings. 6 million shares sold today leaves 14 mil shares restricted until Oct. the BV of the company is $1.76/share according to the IPO. This $49 mil sale is going to the business, the rest of the shares are going to the owners which they can sell in Oct. They are paying off debt (9mil) which is good, but most of the rest seems to be the cost of the offering, and wrapped up in new expenses. They are going to need a lot of money to advertise and sell outside the USA, and they do not seem to have it, and this is probably as expensive as language learning gets.

If they can gain traction outside the USA (4% rest of world sales so far) then they will do well. In much of Asia they do not own the Rosetta Stone name and have to use Rosetta World.

I just cannot get past how little (2%) of the revenue actually finds its way to eps.

Red thumb, for one year, then review.

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#8) On April 16, 2009 at 9:26 PM, devoish (76.27) wrote:

This ticker is not yet ratable. sigh..

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#9) On April 16, 2009 at 9:28 PM, JGus (28.21) wrote:


Nice work. I'll more confidently give it my red thumb thanks to your DD.

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