Hello again. This is my favorite section in SI: 'OVERVALUED STOCKS! Very breifly I will say that AMZN is a great place to buy books. BUT, that does not make its stock price justifiable. For 1997 AMZN had approximately 140 million in sales, very large losses and a current market cap of near 1.8 billion dollars. The Price/Sales ratio is nearly 13. Compare this to BGP or Barnes and Noble(BKS) with sales of 2.7 billion and a market cap of 2.3 billion and you find a P/S of about 0.75!!! AMZN is selling at 17 times the price of BKS, an established, profitable company. Ridiculous.
There are currently 31 booksellers on the 'net that I am aware of. Included soon will be Bertelsman AG, the German conglomerate, and Borders Group, the second largest Bookseller in the U.S. . Barnes and Noble are already here. AMZN had the field all to itself in the beginning, but now it faces stiff 800 pound gorilla competition.
Also, the float has been just 3 million shares with 19.3 million in lockup by insiders. These 'lockup' shares recently became unrestricted, and in the month of Feb. 1998 alone, there have been 20 form 144 filings by insiders registering stock for sale. The float is about to be heavily diluted.
At a recent price of 79, I believe AMZN to be an excellent short, and that it has no business being in anyone's portfolio. I fully expect the stock to fall to 20 dollars by yearend.
Best of luck to all, and if you have enjoyed the recent runup in AMZN, I believe it is best to take your profits at this time........;^) |
