12:13pm EST 24-Nov-99 Thomas Weisel Partners LLC (Christopher Vroom 415-364-26
AMZN, ETYS, DSCM (TWP): E*Holiday Excitement Drives AMZN and ETYS Up
November 24, 1999 Thomas Weisel Partners LLC
Christopher E. Vroom, CFA E*HOLIDAY EXCITEMENT DRIVES AMZN
415.364.2625 AND ETYS STOCKS UP
cvroom@tweisel.com
Internet Commerce
John S. Byun AMAZON.COM(1) (AMZN)
415.364.2749 ETOYS(1) (ETYS)
jbyun@tweisel.com DRUGSTORE.COM(1,2) (DSCM)
Executive Summary
* Amazon.com (AMZN: Strong Buy, $81-3/4) and eToys (ETYS: Strong Buy, $59)
stocks are up sharply this week as excitement over a blockbuster e*holiday comes
into view 2 days ahead of the post-thanksgiving day shopping weekend-one of the
biggest shopping period for retailers in general.
* On Tuesday, AMZN held a conference call with Harris Interactive to share the
results of an online survey focused on e*holiday '99, supplemented with insights
from Amazon.com's own experience.
* Excitement is also being fueled by massive offline advertising by dot.coms as
well as a slew of media/press coverage.
* As we've said before, we would stick with the leaders who have the best front
end and back end and brand name, namely ETYS and AMZN. In our view, you cannot
invest on e*holiday '99 without owning these two names. We also like
drugstore.com (DSCM: Buy, $38-1/2) which has a thriving holiday gift section and
an upside sales impact that is not built into our model.
* Some notable findings from the Harris survey support the attractiveness of
online shopping, particularly during this unprecedented busy holiday season:
** Though most shoppers say they will shop early, reality is that even
online the bulk of sales occur during the last 2 weeks before Christmas.
** Online shoppers' most likely sites to shop are: #1 Amazon.com (46% of
survey respondents), #2 BN.com (23%), #3 Yahoo! (20%), #4 eToys (18%), #5 eBay
(16%) and #6 CDNow (14%).
** Harris expects $8 billion in online holiday sales.
** Of an estimated 100 million online users, 72 million are expected to shop
or browse online and 23 million are expected to make at least 1 purchase (vs.
8% of Internet users last year).
** Online shoppers expect to spend more this year-$346 vs. $297 in '98 (up
16.5%).
** 27% of online shoppers expect to spend between $500 and $1000 online vs.
18% last year.
** 19% of expected online shoppers will be first time shoppers.
* In MediaMetrix data released Monday for the month of October, Amazon was still
the #1 shopping site with unique visitors up 7% to 12.1 million. This is an
acceleration from the decline of 3% in September, increase of 1% in August and
rise of 3% in July. eToys widened its lead over competitors by hosting 2.5 mn
unique visitors, up from 1.3 mn. The differential with ToysRUs.com widened from
698k to 1,277k. In addition, eToys broke through the top 20 rank by moving up
14 spots among all shopping sites to #15.
* We reiterate our STRONG BUY rating on ETYS and AMZN and our BUY rating on
DSCM. |
