Whether over heated exuberance or exaggerated despair is gripping the market, it seems to take on a life of its own, pushing a stock up or down, creating, in fact, a self-fulfilling prophecy. Since StarMedia is based on an ad revenue model, it is difficult to imagine how it could reduce sufficiently its huge marketing expenses, designed to attack an ever increasing number of eye balls to its portal. This is akin to being still alive but in a coma or vegetative state. Time will tell which. The irony is that all the factors which propelled StarMedia and others into the Latin American Net market are still there.
Opportunities continue to grow.
But they will be mined by those who enter the market with the right strategic approach. The deep pocketed giants can approach a market with the advantage of time on their side. They can sustain heavy losses while waiting for a market to mature. Both are a good bet to come out winners, odds which are increased if they can pick off some of their rivals, like StarMedia, by acquiring them. Venture capitalists themselves have not given up on the Latin American market.