Price: $137 5/8
Estimates (Dec) 1998A 1999E 2000E
EPS: d$0.50 d$1.74 d$1.85
P/E: NM NM NM
EPS Change (YoY): NM NM
Consensus EPS: d$1.70 d$1.27
(First Call: 12-May-1999)
Q2 EPS (Jun): d$0.12 d$0.52
Cash Flow/Share: NA NA NA
Price/Cash Flow: NM NM NM
Dividend Rate: Nil Nil Nil
Dividend Yield: Nil Nil Nil
Opinion & Financial Data
Investment Opinion: D-2-1-9
Mkt. Value / Shares Outstanding (mn): $21,607.1 / 157
Book Value/Share (Dec-1998): $0.49
Price/Book Ratio: 280.9x
Stock Data
52-Week Range: $221 1/4-$13 5/16
Symbol / Exchange: AMZN / OTC
Options: Phila
Institutional Ownership-Spectrum: 36.2%
Brokers Covering (First Call): 22
ML Industry Weightings & Ratings**
Strategy; Weighting Rel. to Mkt.:
Income: Underweight (07-Mar-1995)
Growth: Overweight (07-Mar-1995)
Income & Growth: Overweight (07-Mar-1995)
Capital Appreciation: In Line (28-Jan-1999)
Market Analysis; Technical Rating: Average (27-Apr-1999)
*Intermediate term opinion last changed on 09-Mar-1999.
**The views expressed are those of the macro department and do not
necessarily coincide with those of the Fundamental analyst.
For full investment opinion definitions, see footnotes.
Investment Highlights:
* On May 17, Amazon.com announced that it will
begin selling New York Times bestsellers at a 50%
discount, instead of its usual 20%-40% off. We
believe that this move has several implications for
the company, stock, and industry.
* Namely, we believe the move is:
1. positive for the long-term value of Amazon.com-the-
company (we do not believe that the cut will
have a major effect on the growth of
Amazon.com's gross profit, especially over the
long term),
2. possibly negative for the near-term performance
of AMZN-the-stock (the perception of a possible
price war is rarely positive for stock prices,
especially in an industry in which the fear is that
margins will go to zero), and,
3. negative for competitors, both on and offline
(Amazon.com now has the wealth, scale, and
ambition to seriously undermine the
competition—and appears willing to use it).
* We believe that Amazon.com's shareholder base is
still in transition, with a group of investors moving
out of the stock as a result of the company's
slowing revenue growth. Aside from the typical
end-of-quarter run and possible new product or
investment announcements, we don't know of any
catalysts likely to drive the stock higher near-term.
We think it should be still a core holding in our
long-term internet portfolio, however.
Comment
United States
Internet \ Electronic Commerce
18 May 1999
Henry Blodget
First Vice President Amazon.com
Implications of Price Cut ACCUMULATE*
Long Term
BUY Reason for Report: Company Announcement
Merrill Lynch & Co.
Global Securities Research & Economics Group
Global Fundamental Equity Research Department
RC#20113828
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Amazon.com
Rel to S&P Composite Index (500) (Right Scale) |
