Very enjoyable post. Thanks for bringing back the memorable (and unusual) face off between two Wall Street analysts. That was really something. My guess is the truth probably lies somewhere in the middle of the two extremes.
>Now, I make my own analysis, the potential market on Amazon.com in
>the future on all of their business will become around 200 billions
>dollar around the world (not only in US) by 2003/4. Assume net
>margin (after tax) is around 5%, so net profit will become around 10
>billions. Let's put P/E 15 on 10 billions net profit. So, the
>potential market capitalization on Amazon.com should be around 150
>billions dollar. Now, market capitalization only around 20 billions
>dollar at $125/share. There is 650% potential return on investment
>in 4 or 5 year investment. Not a bad return, right...:)
>Remember, I talked on P/E 15, not 40....:)
I would like to agree with this analysis because it seems really sound and maybe possible and I usually can't find people who will give a long term analysis... and you might be right... one thought though...
In the last year, Amazon.com reported revenue of about $1 billion dollars. How does Amazon.com generate $200 billion revenue per year 4 or 5 years from now?
If Amazon.com's revenue growth is 100% per year for the next 5 years, then Amazon.com will only have $32 billion in annual revenue 5 years from now. But amazingly enough, in 7 3/4 years at 100% growth per year, Amazon.com could reach $200 billion in annual revenue.
To get to $200 billion revenue in 5 years, Amazon.com will need to increase revenue 190% per year.
Maybe this is possible. Do you think this is possible? It would be a miracle performance in the face of stiff competition from hundreds of well funded companies.
|
