AOL, Inc. formerly known as American Online, a New York based internet and services media company, posted a $1.1 billion loss yesterday. Its online advertising and social-networking service Bebo were under-performing which were some of the reasons that lead to the 10-digit loss. However, after yesterday’s report of more than a billion dollars loss for the 2nd leg of this year, its stocks rose 7.7% to $22.75.
Despite the bad news, the stocks seem to head upward following yesterday’s gain. If it continues the ascend, the immediate resistance AOL could encounter is $23.82. If that marker gets cleared out and the stocks pass above it, $24.50 could be the next resistance. On the other hand, if AOL stocks fail to follow up yesterday’s 7% gain and flow with the negative report, the immediate support could be $20.41. If the stock price slips and drops further below that level, the next support could be $19.61.
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A large aprt of the problemand confusion is that the majority of the pundits in the media,now talk about forward P/E multiples expressed on the basis of Operating earnings not As reported (GAAP) earnings, quite unchallenged. The correct definition of P/E multiple, and the one for comparison to the historical average of 14 times, is the GAAP data.