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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (76860)	9/8/1999 2:09:00 AM
From: Bilow	Read Replies (1) \| Respond to of 164684

Hi Michelle Harris; Regarding AMZN and those bonds. If you look at the market cap of AMZN at $234/$117 per share, the value of those bonds is small by comparison. If it is the case that AMZN has an even more glorious future ahead of it, then those bonds are going to be so small as to be ignored. If investors are expecting a return of 20% per year, then the market cap would be rising to something in the $100 to $200 Billion range, and a billion dollars or so worth of bonds just isn't significant. The company could pay them back with a stock offering that would be almost completely undilutive, the stock price would be so high. So I don't see why the long term buy and hold types would care much about them. The bonds are just not a part of the story. On the other hand, the existence of the bonds does pose a higher bankruptcy threat to AMZN, but that has to be the furthest thing from the minds of everybody long this stock. If the interest on those bonds works out to be a significant fraction of AMZN's earnings or cash flow 9 years from now, then people who hold the stock between now and then are going to lose a whole lot of money, because that means that AMZN's profits are not going to be very high then. The bonds just aren't that big of a deal, except in the event of bankruptcy. I calculated how much the float would increase if the bonds were called at $234 some time ago on this thread, and it wasn't that much. The threat of sudden increases in the float would tend to lower the stock price, but only to the extent that bond holders weren't already hedged by shorting the stock. Long note on bond calling: #reply-10991672 -- Carl