Amazon is a buy now for the long term
Hello Jing and thread,
About a month ago I wrote a message why I thought Amazon is the premier consumer e-commerce company. Give the severe stock correction, it is a perfect opportunity to acquire for these reasons:
New Customer Growth - according to their most recent quarterly report, AMZN added 1.2 million new paying customers in the past 3 months, almost as many new subscribers as AOL added in the same time period.
Revenue Growth - $293 million in revenues last quarter 99 vs. $87 million in revenue same quarter 98. A 3X increase in one year. Impressive.
Market Domination - Always dominated and continues to dominate books.
Bezos decided to get into CDs and after only 3 months it entered the CD market it became the #1 on-line music store (much to the dismay of CDNOW) While EBAY (another one of my favorites) will prove to be a much more formidable competitor than CDNOW, Amazon's razor sharp customer service focus should do well in the auction space.
Best Customer E-Service - 60% of Amazon's customers are repeat. Their website is designed and inspired by millions of customer experiences. Every E-Commerce company can learn something about user interface design from Amazon.
To be fair, we need to also talk about it's negatives:
They Lose Money - Why? The reason is Bezos invests most of their fast growing revenue into marketing and state of the art fulfillment systems. He knows that in the internet, first to market advantage is the Royal Flush of the game. Marketing helps Amazon preserve its first to market advantage to remain the e-commerce brand of choice. The one lesson E-Commerce is teaching us is that it's not easy, especially fulfillment. By investing in state of the art fulfillment systems, AMZN will have the capacity to continue filling orders and keeping customers happy while their orders continue to grow rapidly.
So with the stock hovering around 110, well off 50% of its yearly high of 221, its a very attractive long term buy.
Regards,
Steve
For my whole portfolio as well as my investing philosophy, go to geocities.com |
