(If fundamentals are deteriorating, that would be a different story.)
That's my understanding of Amazon.com. Debt, losing more money the
more it sells. A cutthroat industry being made more cutthroat, with
no barriers to entry.
Hey, I buy all my books from Amazon.com - I just link to it from my web site, buy it, and as an associate I get an extra 15% off in addition to the 30% or so below retail, and no taxes. My mom also buys her books there. I questioned her about it - only reason for her actions: it's cheaper. Is there anything special about the site? The layout? No, in fact it's kind of confusing. Why couldn't Yahoo just start selling books, CD's, etc directly? Wouldn't that cut into Amazon's business? Of course. Would Yahoo do this? Well, Yahoo's not necessarily a bad business, just an overpriced stock, and I think Yahoo's more sensible than to enter such a competitive industry. I see obviously horrible dynamics like Iomega's. IOM had explosive sales in a horrible industry - data storage. So people priced it ridiculously, thinking one day everyone will have a zip. Well, ok, that happened, but is IOM a good business? Is it's stock a good stock anymore? No. Its competitors are willing to go bankrupt undercutting it on price. Amazon.com's sole benefit is is its low prices, and hey, an industry that competes on price only...
I don't believe for a second Amazon.com will become THE place to shop on the internet, yet this is already priced into the stock, as people continue to ignore the horrible business economics, so I feel I am indeed shorting an overpriced stock of a bad business.
BTW, I've put up a new web site - ValueStocks.net - at you guessed
it valuestocks.net . I'm still working on it, but the basics are up. Feedback welcome, especially from the posters here. Of course, ironically, I'm an Amazon.com associate, so if you want to buy an investment book and it's not in my bookstore, let me know so I can add it. I'm especially interested in putting up books that the posters here think are valuable.
Good investing,
Mike |
