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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 247.35+0.4%Jan 9 9:30 AM EST
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To: Rob S. who wrote (37722)1/31/1999 10:33:00 AM
From: dave michaels  Read Replies (1) of 164684
 
Seems like the new offering will push AMZN to $160 minimum. Please correct my logic.

It seems to me that institutions with options to buy AMZN at 156 will want this stock to go to around 160 as quickly as possible. They will use whatever direct and indirect pressure they can to influence those who influence the stock. I wouldn't expect anyone to short until the stock is up at least 20% above their buy in price or to around $190 because that 20% divided by 10 years makes their annual return only 2% plus the 4.75% interest.

Of course if the stock were at 190 and started tanking, a lot of shorts might pile on to protect their profit and it could go down very quickly --to about 156, where I'd expect buying and covering to come in...And the process would probably be repeated each time the stock runs up, effectively keeping it in the 150-200 range.

But for now, it seems the only way is up until about $160, and after that it'll probably retest $200. It might take a few weeks to get there (to avoid any appearance of collusion), but buying below $160 seems close to a sure thing...

I was short this stock multiple times after the split (so I understand the valuation problems and general negatives) and did a lot of boxing and unboxing and ended up stuck with 1 long position which I planned to ease out of by selling covered calls. However, now I have actually added 2 new long positions. Based on the above logic, I was surprised to see the stock go down on Friday. What am I missing?

Thanks for any and all feedback.
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