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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 244.25-2.0%Nov 12 3:59 PM EST
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To: Ken Pomaranski who wrote (1991)3/5/1998 7:35:00 PM
From: Michael Coley  Read Replies (1) of 164684
 
RE: A Bearish Argument.

Ken,

I've only taken a preliminary look at AMZN, but I must say that medium- to long-term, I side with the bears. (Short term is always anybody's guess.)

I love Amazon.com. I buy virtually all of my books from them. I am an Amazon.com associate and get commissions when people buy books recommended on my web site (http://www.wwol.com/~mcoley/books.html). I think they've done a fantastic job putting together their web site. Their selection of books is unmatched.

But none of that necessarily makes a good stock.

AMZN's Market Cap is almost $2 billion. That's almost as much as Barnes & Noble, who has well over 10 times as much sales as Amazon.com (and makes a profit). Amazon.com can (and probably will) do a LOT of growing and still not be fairly valued.

Then there's the issue of profitability. It looks like they have cash to fund their losses for a while, but when are they going to become profitable?

Now, just one observation on why (even with everything I've said) I would never short. Look at the float. 3MM shares. Ouch. I can see the pain now. Shorts had better have plenty of margin available if they don't want to get caught in a squeeze.

Ken: Have you looked at RMBS? This reminds me a *LOT* of them in many ways (small float, way overpriced IMHO, lots of shorts).

- Michael Coley
- wwol.com
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