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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Timoteo who wrote (1437)	1/24/1998 5:09:00 PM
From: Dan Ross	Read Replies (1) \| Respond to of 18691

To all: This is something I typed up on Thursday night....forgot to post yesterday....Let me know what you guys/gals think.... ENJOY Amazon.com renamed Skyhigh.com What in the world is going on? Amazon.com announced yesterday that their net sales for fiscal 1997 were $147.8 million, an 838 percent increase over net sales of $15.7 million reported for fiscal 1996. In the fourth quarter of 1997 they reported net sales of $66.0 million vs. net sales of $8.5 million reported for the fourth quarter of 1996, a 680 percent increase. The revenue increase for Amazon.com is nothing short of astronomical. Years ago naysayers were stating that internet commerce would not amount to much and that such ventures would simply be fads. However, it appears as though the capital markets are disagreeing with such naysayers. As venture capitalists run over each other to back such ventures numerous on-line ventures have popped up. The list of publicly traded on-line ventures has slowly but surely increased also. In 1996, IMALL (NASDAQ: IIML) and ETRADE (NASDAQ: EGRP) went public. In 1997, ONSALE (NASDAQ: ONSL), AMAZON.COM (NASDAQ: AMZN), PEAPOD (NASDAQ: PPOD), N2K (NASDAQ: NTKI) and PREVIEW TRAVEL(NASDAQ: PTVL) went public. If on-line ventures continue to post strong results you can expect to see more and more of these firms rushing to go public and create instant millionaires for their founders. However, despite the strong year over year increase in revenues from many on-line ventures, valuations of numerous on-line companies are out of this world. Take for example Amazon.com. Over the past year Amazon.com's stock price has soared from a 52 week low price of $15.75 to a current price of 61 5/8 as of Thursday's close. If you were to calculate the market capitalization of Amazon.com it would equate to $1.47 billion. YES!!! You read that correctly. $1.47 billion for a company with revenues of $66 million that has yet to post a profit. As a matter of fact, the loss per quarter appears to increasing whereas the revenues and stock price are going the opposite direction, upwards. But how does Amazon.com compare to one of its online competitors Barnes and Noble (NYSE: BKS)? The market capitalization for Barnes and Noble is currently a little over $2.0 billion on annual sales of over $2.5 billion. Additionally, Barnes and Noble states that they believe their on-line site will fetch over $100 million in revenues in 1998. Not bad for a firm has been in the "on-line book business" for less than a year. So in the end will Amazon.com's rich valuation come down to reality? If other publicly traded, on-line ventures are an indication of stock prices, Amazon.com's investors are due for a major shake up some time in the near future. A recent article, biz.yahoo.com, describes how the number of on-line book stores is about to explode in the near future. What will this due to profits for on-line book sellers? For an example, let us look at on-line trading. In 1996, E-Trade went public and gained huge notoriety for its rock bottom commissions for on-line trading. Since then numerous ventures have gone on-line with competing services at far lower prices. What has happened to E-trade? Many customers that initially opened an account have since left in search of lower commissions available at newer, on-line trading companies. Finally, the stock price has languished in recent in recent months as investors sold their shares slashing E-Trade's market capitalization by 50%. OUCH! So what will happen to Amazon.com's stock price over the next few months and years? Time will tell but from the looks of things it will be one heck of a ride! If you are on the short-side or long Amazon.com shares you should buy yourself some Pepto Bismol or Rolaids if you have a weak stomach. This report should not be construed as an offer to sell or solicitation of any offer to buy any securities. Opinions expressed are subject to change without notice. This report has been prepared from original sources and data which I believe to be reliable but accuracy is not guaranteed. This research report was prepared by Dan Ross who, from time to time acquire, hold, or sell a position in the securities mentioned herein. Dan Ross may, from time to time, perform investment banking or other services for, or solicit investment banking or other business from, any company mentioned in this report or its affiliates.