Bankrate, Inc. (RATE)

kberk (< 20) Submitted: 11/06/07 2:03 PM : Start Price: $52.03 RATE Score: -5.91

While they have done a good job monetizing their users and growing traffic (to a point), Bankrate is grossly overvalued considering their revenue and profits is probably going to flatline soon:

1) Raising rates (8 times in last two years!) will alienate advertisers by reducing ROI - making them search for alternatives
2) Some of their mortgage customers are going out of business
3) Overall end-user demand for mortgages (esp. non-conforming) is dropping dramatically - this will impact both a traffic and advertiser demand
4) The credit crunch will weed out weak banks, lenders and credit card companies (the ones that need to advertise the most on Bankrate)
5) A faltering economy will reduce demand for savings and CD accounts (they need to pay bills)

Look for weak guidance early in 2008 to take down the stock to the low 30s (or below).

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