The Walla portal has gained an aggregate 133% since the beginning of December to reach a market cap of $12.4 million.

Despite the current optimism among investors, there are those who are still exercising caution. Capital market players believe that when a bull run lifts market caps, it is prudent to carefully weigh each company on its own merits. These players warn against the herd effect.

Market players said that Walla's annual sales have to date come to some NIS 17 million, and that it is still far from posting a net profit.

Meanwhile the company is talking about reaching gross profitability in December, which means that operating profit is irrelevant at least for the fourth quarter of last year, the players said.

They noted that Walla's shareholders equity is just NIS 424,000, which hardly explains its high market cap.

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Walla's principal shareholders, the Ha'aretz group and the Bezeq phone company are expected to together invest $9 million in the company, which should provide it with oxygen for the coming period. But even if this investment is taken into account, Walla is trading 30% above the value of the cash it is to have at its disposal. Meanwhile, there has been no apparent improvement in its sales rate, to suggest growth in business activity.

The fact that Walla shares have since December been posting sharp gains on big volumes of trade, while most shares have been dropping, is somewhat strange and does not add credibility, one Tel Aviv player commented.

But another player disputed this claim. He explained that most small shares have been rising, and found it reasonable that Walla shares should correct upward after drastically dropping over the last year.

At any rate, one possible lesson from the Nasdaq crash is to make prudent investments and re-examine the soaring price of shares as the market gets bullish.

TheMarker is also owned by Ha'aretz Group.