Dwight,
While I am also an un-believer, the one extra thing that needs to be factored into the valuation is the brand. Amazon are seen as being larger than just books (OK, they are in music sales now also, a business with even tighter margins...) and, in some respects, their share price holds a great deal of the markets valuation of the potential ALL e-commerce activity.
Look at what happened to Netcom in late 95; the ISP market was seen as the gateway to e-commerce (ISP's were about the only people that got money from consumers). The stock went from the mid-20's to over 90. Then the market realised that the view was simplistic and the truth would be more complex and harder to value and prices came all the way back down again.
AMZN is a good company, it is growing (it seems) well, has OK marketing (the portal deals it has done have proved expensive and ineffective), great brand recognition and is starting to diversify. $7Bn - not in a month of Sundays but right now that doesn't matter. People and, perish the thought, funds, want a slice of the future and as far as they can see, the future has got a big Amazon stamp on its backside. We can tell them they are wrong but if they don't want to believe us, they don't have to. Yet.
T |
