SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 233.22+1.8%Nov 28 9:30 AM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Jan Crawley who wrote (3455)4/27/1998 5:10:00 PM
From: J.S.  Read Replies (1) of 164684
 
Jan,

A very good question. Basically at this point we are dealing in
potentialities and we have yet to see the debt filing (AMZN did not
want to talk about it either).

Would you lend AMZN your life's saving? No ..well at what interest
rate. At a high enough interest rate, you could take the additional
cash over what you could earn on a 30year treasury and buy some
put options. Now you reason that if they don't go bankrupt, you
get your principal back and if not then you make out on the put.
Who will write you this put? If someone is already short, they may want to hedge their bets and write you these puts. If you "pay someone" to write you the puts they are likely to take on a short
position to limit their losses (with possibly some calls too).
That puts downward pressure on the stock. There is a potential
for a huge short position here.

With a convertibility option, the lender may not need to buy puts,
but we have dilution up the wazoo. Either way you can see that this
type of arrangement can't be good for the equity. Rarely does a huge
debt float help a stock go up and only when the stock has been so
depressed on fears of current account deficit.

As I said, we will have to wait for the filing for more details.

Take Care,
Joe
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News