Islander,
Do you believe 10 or 20 million people might
buy a book or a CD or something else from Amazon.com by 2001?
If I got the figures correctly from the current 10Q, AMZN
had 2 mil. customers, and made about 200 mil. in sales. That's
about $100 (gross) sales/customer. Using that number, then 20
mil. customers (a big number), would give you 2 Bil. in sales.
Right now, AMZN trades at 6B in market cap., so we'll call it
fairly valued at 3x sales, if: AMZN's stock price stays where it
is for the next five years (an ave. 60% growth rate in sales
gets AMZN to 2B in 5 years).
Currently, AMZN nets 20% (approx) of sales as "gross
profit". This is the money left after paying for the books
that are sold. That figure would give a hypothetical 400 mil.
in gross profit in 2003. From that, subtract about 50 mil.
to pay off the first junk bond interest payment, so that
leaves 350 mil. As of Mar-98, sales/marketing, R&D, and G&A
totaled 30 mil. in the quarter, or $120 mil. annually.
Assuming only a 10% increase in these costs per year, they'd
be about 1.6x higher thnn now, in 5 years, or 200 mil. That
leaves 150 mil. in earnings. or $2.75/shr. At today's price
of $140, and given this optimistic scenario ... AMZN would
be trading at 50 times earnings _if_ the price stays the
same as today ($140). Doesn't leave a lot of room for
growth. |
