What possible events can change the perception of limitless e-commerce profits? SEC investigation? Encroachment by established brick and mortar companies?
I've thought about this question more than once. I note tonight that B&N's same-store sales at their B&N superstores increased a respectable 4.5%, year-over-year. That is, I believe, slightly more than the overall growth in the book-selling industry. How is this possible? I thought that everyone bought their books from scamazon now, and will be buying all their Barbie dolls from scamazon now too? I'm not denying the reality of Amazon's sales increases q-q. But this earnings report from B&N suggests that the paradigm shift to e-commerce hasn't happened, at least not at the expense of cannibalizing sales from bricks-and-mortar types of old-fashioned stores.
As Mark Twain wrote, "the reports of my death are greatly exaggerated". But I digress. I agree that the market and analysts really could care less about profitable business models, "valuation concerns", etc. What they care about is being on the right side of a trend, commissions for selling stock from large holders to the public, investment banking business relationships, and so on.
I believe that the only thing which will give a shock to investors is one or two sequential qtrs sales decreases or at least only modest increases. That has actually already happened for Amazon.com, if you look at their book sales in the USA only. At this point though, analysts and investors chose to overlook this, because they are so enthused about the expansion in Europe (through acquisitions), and the "great" CD sales showing. The book sales issue will be revisited later, I believe. Don't bother the analysts with questions of profitable business models at this point either, because they aren't ready to turn on their client Amazon.com Corp., and Amazon's insiders. The mo is still up, and the prospects for investment banking business remain alive. |
