Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: Roger A. Babb who wrote ()	1/2/1998 9:57:00 AM
From: doug doan	Read Replies (1) of 18691

I see you have put AMZN on your list. Amazon.com is my favorite short. I saw that your target price was in the 30s. How did you arrive at that target? FWIW I am having a terrible time trying to develop a model that I can use to evaluate these sort of stocks. No earnings to go on makes it tough. The fact that they lose money on every sale and that margins on future sales is declining is even more troubling. Groucho Marks once said in one of his movies that they lose money on every sale. The stiff replied If you lose money on every sale will you not soon go bankrupt? And Groucho replied , "No we expect to make it up on volume". That seems to be the business model for Amazon as well. I might also add that the one dimension about AMZN that scares me is the management is far more adept than we saw at Zitl. An overvalued stock with bad management (aka Zitl) was far easier for me to feel comfortable shorting. Thoughts?

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