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

AMZN 220.66

+1.6%

3:59 PM EST

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To: John May who wrote (152)	8/27/1997 6:20:00 AM
From: John May	of 164684

A columnist in the Sep. issue of Money Magazine recommends selling AMZN on basis of high evaluation, he says, "Analysts don't expect the online store to show a profit this year or next. Yet its $29 stock commands 22 times sales." His computation of sales omitted 2nd Qtr. '97 results, yet article quotes stock data as of 7/31; 2nd Qtr. results were already available. Why didn't he use them? At $29 (stock closed Aug. 27 @ 28 1/8) x 23,859,000 shares = mkt. cap. of $692 M. Sales for last 4 quarters were $56.5 M = 12.2 x sales, not 22. One must be careful using "x sales" to evaluate a company in such early stages of growth as AMZN. To wit, 2nd Qtr. '96 AMZN sales were only $2.2 M; 2nd Qtr. '97 sales were $27.8 M. The Money Mag. columnist included the former number, not the latter. AMZN should achieve sales of $130+M this year, 1/5 current mkt. cap. Perhaps recent strength in the stock means 3rd Qtr. revenues are running ahead of expectations. Any comments?

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