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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 234.37+0.2%Dec 2 3:59 PM EST
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To: Gil Gilbertson who wrote ()7/7/1998 1:08:00 PM
From: trouthead  Read Replies (2) of 164684
 
Thought this was interesting. It is from the IFC Newsletter here on SI.

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Steve recently did an analysis on Amazon Books. Assuming that they could grab 3% of the overall book market looking ahead 2 to 3 years, that would put their sales north of $1 billion in revenues. "If you want to add music and videos, they could have revenues of $2 billion by the year 2001, if they are trading at 5 times revenues, they could have a $10 billion market cap during that time period" he says. Amazon's current market cap is $5 billion and a $10 billion market cap would imply a price of $200 per share. "But that could be frothy if the Internet shifts to direct publisher to consumer sales," Steve cautions. "The role of middlemen on the Web must have greater added value to justify consumers paying that extra margin to them."
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Just 3% seems a no brainer. The way the shorts talk it makes it sound like amzn has to be a world beater to justify the current price. From the above excerpt it sounds like if they get 3% of the book, video and cd markets, which sounds tiny, they will justify an even higher price. How can they not get a 3% stake in each of those markets? Seems very doable to me. What am I missing?

jb
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