Comments about AMZN as a short:
Sure it's overvalued, but so are a lot of stocks, and they can get even more overvalued. First of all, a lot of people (including me) seem to think that they have a good web site. I like how it's set up, with a place for user reviews, as well as the way to reference other books bought by people who like a specific book. It's these types of details that can make AMZN's web site very popular. Next, it appears that AMZN is growing very quickly, and there's no reason to think that this growth will slow down any time soon. People love to buy into a company with rapidly increasing sales. The reason most people think AMZN is a good short is because it is losing money, and that the book business is too competitive (their margins are too thin) for them to make any real money from selling books over the net. I agree with this, and I don't think AMZN can make much money from selling books over the net. However, there are other areas where AMZN might be able to raise money with their business model. They could make money from selling advertising on their web site, or maybe even sell product placement on their site (similar to groceries selling shelf space). Also, I think they will be well positioned to branch out into selling CDs and movies on line, and possibly other things as well. I personally don't think they'll achieve huge profits to justify their market cap, but I can see how it might be done. |
