Mean Street:–How Much Higher Can It Go?

Published on July 30, 2008
by Evan Newmark

If you are a believer in efficient markets, every now and then a hot tech stock comes along that pushes your conviction to its limits.

VMware was bought for $625 million by EMC in 2004, went public in 2007 and soon hit a market cap of $48 billion. It currently trades at about a quarter of that value.

Even the hottest stock can’t defy gravity indefinitely. Or can it?

Let us take The San Francisco software company has been orbiting the stratosphere ever since its IPO in 2004. Its shares went public at $11. Last month, the shares peaked at more than $75.

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