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Strategies & Market Trends : Good Investment Theses: VALUATIONS w/ FUNDAMENTAL ANALYSIS
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To: Chuzzlewit who wrote (156)7/19/1999 6:00:00 PM
From: The Philosopher  Read Replies (1) of 160
 
Amazon.com is able to maintain close to a zero operating
cash flow only by virtue of the fact that sales are growing and that there is a major timing
difference between cash in from customers (sales are all on a cash basis), and the cash it
pays out to suppliers (which is typically around 60 days). So, in a very real sense it
looks like a Ponzi scheme, where accounts payable due suppliers and the sale of stock
(to employees via stock options) are keeping the company afloat.


I had noted that, too, when I went to look carefully at AMZN. But I didn't liken it to a Ponzi scheme. But maybe that's really what it is! What does happen if AMZN hits a low month for sales? Hmmmmm...
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