Amazon.com, Inc. (AMZN) Message Board

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Technology Stocks : Amazon.com, Inc. (AMZN)

AMZN 243.15

-0.6%

3:42 PM EST

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To: Eric Wells who wrote (86849)	12/9/1999 5:26:00 PM
From: Greater Fool	Read Replies (1) of 164685

Thinking back to the fundamental of fundamentals, discounted cash flows: At a discount rate of 10%, a valuation of $100 billion requires a steady-state cash flow of $10 billion a year. The riskiness of Yahoo would certainly call for higher discount rates, and these cash flows are considerably in the future, not now. Can you or anyone else in their right minds imagine Yahoo with cash flows anywhere approaching $10 billion a year, let alone well beyond it? The valuations I have seen analysts performing tend toward the absurd, calling for, in one instance, operating margins of 85%. Maybe I just don't have a good enough imagination. After all, who am I to argue with the millions of investors trading Yahoo stock? Or is that just an example of the reasoning in "Eat garbage -- a million flies can't be wrong"?

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