Excel Management

Rehabilitation Or Redemption: What Does Henry Blodget Want Most?

Remember Henry Blodget? How could anyone forget? Isn’t this the man who made headlines in the dotcom boom of late last century by making a ridiculous share price prediction for the then heavily loss-making Amazon.com , only to see his forecast come true just three weeks later?

As Blodget acknowledges wearily, the story got worse after that. He moved from Oppenheimer & Company to Merrill Lynch, where he was paid a reported $12m a year and became a poster boy for the technology boom. However, he left Merrill in 2001 after the dotcom crash and a year later emails from the firm that were published by the then New York state attorney-general Eliot Spitzer led the Securities & Exchange Commission to file a civil securities fraud case.

The case was settled with no admission of guilt, with Blodget paying a $2m, plus a $2m disgorgement and agreeing to a censure and permanent ban from working in the US securities industry. “It was a lot of money,” winces Blodget, 48. “I don’t even like to think about it.” Now he is co-founder and chief executive of Business Insider, a stock market news website group that claims 55m unique global visitors a month and has recently launched in London.

So what is he trying to do? Prove his detractors wrong as a media tycoon or achieve some kind of redemption for what lies in the past? Blodget laughs nervously when I say this on a rainy evening at a restaurant in London’s Canary Wharf. I order what Americans call hot tea with milk. Blodget wants to as well but is worried. “I’m scared to have that as I wouldn’t get to sleep,” he frets. “I would totally have it.”

I want to hear the story in his own words. Born to a banker father in New York, he worked on a provincial paper in Nantucket, Massachusetts, went to Yale and arrived on Wall Street in 1994 as an institutional analyst with Prudential Securities, before joining Oppenheimer.

“That’s when I gained some public coverage,” he recalls, with understatement. “There was a lot of publicity around Amazon.com.” Can he remember the numbers? “Only because I have gone back and reviewed it many times. When I started covering the stock, it was about $90 a share. I put together a due valuation analysis to try to figure out what it might be worth and there was a huge range, from zero all the way up to $500 a share. So I laid out that scenario, the stock continued to rise and then it was about $240 and the sales team at Oppenheimer were asking what we really thought this stock could do.
“I put a $400 target on it at the end of 1998 and was very startled to see the reaction that got. It didn’t seem particularly outlandish. It was like predicting that a $24 stock would go to $40 but, maybe because of the extra zero or for whatever reason, it caught people’s attention. The stock got to $400 within three weeks, which I was not expecting.”


Market collapse

Amazon peaked at over $500-a-share and then collapsed. But it gradually came back and is now trading at several times that $400 mark, adjusted for stock splits.” Sixteen years later, Amazon’s CEO Jeff Bezos is a billionaire and Blodget’s prediction doesn’t look at all outlandish. “No,” he agrees. “I’m glad that one worked out. A lot of others did not.” Indeed, over-optimistic forecasts for the likes of Yahoo, eBay and AOL saw Blodget’s star tarnished in contrast to its earlier gleam.

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Rehabilitation Or Redemption: What Does Henry Blodget Want Most? - Excel Management Remember Henry Blodget? How could anyone forget? Isn’t this the man who made headlines in the dotcom boom of late last century by making a ridiculous share price prediction for the then heavily loss-making Amazon.com, only to see his forecast come true just three weeks later? Read More