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

To: Glenn D. Rudolph who wrote (5913)	6/13/1998 10:51:00 AM
From: Doo	Read Replies (1) \| Respond to of 164684

A simple link to Edgar would suffice next time, Glenn.

To: Glenn D. Rudolph who wrote (5913)	6/13/1998 12:48:00 PM
From: H James Morris	Respond to of 164684

I copied this from MF. Its about the recent Everen downgrade. < "To justify a neutral rating, our sales forecast in 2002, upon which our valuation is based, would have to be about $2.3 billion, or about 11.7 million people buying $210 books per year from Amazon. This is above our projections by about 50%; the core of heavy book buyers in the US is less than half this 11.7 million number. Simply put, we believe that this shift from the location-based retail paradigm is just too much too soon." Yes, analysts have become prostitutes over the last ten years in a new role of selling rather than examining and evaluating stocks, but I hope everyone appreciates the courage it takes for an analyst like Blenk to break with the pack and reach back to fundamentals to determine a valuation. IMPORTANT [fine print] READING FOR AMAZON.COM STOCK HOLDERS: " Our calendar 2001 estimated multiple is 30 and our year 2001 target price is therefore $50. To compensate for the fundamental risk involved in web retailing, we add 0.5% to the EVEREN (EVR-$52 3/4) market matrix discount rate of 5.15% to arrive at an opportunity rate of 5.65% which we use to discount the price in 2001 of $50 back to mid 1999. This discounting of the estimated price in year 2001 yields $42 for our 6-month target price and $45 for our 18-month target." ====================================================== What that fine print means is that EVREN is using a discount rate of 5.65% to arrive at $42 price in six months! Pause from all the hype on this board for a moment and think about this. If you buy the stock today (or six months from now) at $42, you will make 5.65% return holding the stock until 2001 per the analysts projected end price of $50. Is it really worth it to you to get a two-year treasury bill return for buying a stock as risky or volatile as Amazon.com? I would guess your expectations are really 30% or more. Without assigning values to esoterics like alphas and betas, you implicitly understand the high risk in buying this stock and you want to be rewarded for it. If you discount the EVEREN projection of $50 at 30%, you get a present value for the stock today of about $25. This means you shouldn't pay more than $25 for the stock now if you hope to make 30% per year on Amazon.com stock. You do want to make 30% on your investment, don't you? FYI: I use the same base model as EVEREN to value the stock. I believe Amazon.com will probably be a healthy living company in 2001, but I believe Amazon will have slightly less revenue growth than EVEREN projects and I don't believe Amazon will be able to increase today's gross margins as much as EVEREN projects (primarilly due to the increased internet competition springing up in the last six months). Using the same technique they use, my model projects a "correct" stock price of $8 to $10. As has been written ad naseum on this board, stock prices don't have to be at their fundamentally determined value. Board optimists say it's "supply and demand", while board cynics say "fear and greed" that determine the short-term price. That accepted, all major modern portfolio theorists, all major investment banks, and all professional investors know that there is "reversion to the mean" at some point i.e., sooner or later, stock prices come back to their fundamental value. Whether you believe my assumptions about the future or EVEREN's, this is a high-risk holding in your portfolio because of Amazon's overvaluation (it doesn't mean this isn't a great company, just that the stock price has been [temporarily] bid up higher than the company's anticipated great future performance).

To: Glenn D. Rudolph who wrote (5913)	6/13/1998 9:13:00 PM
From: Mark Myword	Read Replies (2) \| Respond to of 164684

>> That is the end of the SEC filing. Note it was filed late on a Friday as is their typical style. Not a pretty picture either.<< Glenn - thanks much for going to all that trouble for the thread. Much appreciated by all , I'm sure. One item I hadn't noticed before - their auditor is Ernst & Young. They always seem to be the auditor in many flaky companies , particularly those involved in stock scams and promotional deals. They can be counted on to let AMZN go to the limit in structuring and engineering the financials to create the best impression for public consumption. It sort of fits the pattern of everything else we've seen in this saga , doesn't it? This is not good news for the shorts, but it won't matter right away , as audit time is six months away. E & Y has been involved in numerous lawsuits regarding the quality of their audits , but then again , so have all the others. They have paid some whopping settlements , too. What a whore's game the whole thing is becoming. JMHO , of course.