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

To: H James Morris who wrote (10892)	7/20/1998 10:41:00 AM
From: umbro	Respond to of 164684

Company says: those who control the float, control the price. [my paraphrase] investor.msn.com Thanks for the link, HJ. Here's an excerpt that somewhat belabors your point. :). First time, I've seen the co. say anything about the float, in print. Looks like they're in line with the approx. 10 mil. float number. I think that MSN would've been more accurate if they called the debt issue a 530 mil. issue, because that is what has to be paid back, but with AMZN what's a few mil. here/there? Ownership is so highly concentrated in the hands of insiders -- especially founder Jeff Bezos with his 41% of the 48.3 million outstanding shares -- that there is almost no "float," or shares available for trading in the market. The company's investor-relations staff estimates the float on the lower end of 10 million to 15 million shares. No big mystery then as to how Amazon can move 10% or more in a day: Very little buying or selling pressure is needed to move the price of so few shares. Indeed, from June 1 through July 14, the Interactive Week Index (IIX) of Internet stocks moved up 29% while Amazon advanced 169% with volume on some days approaching 9 million shares. The good news for anyone who's long the stock: Bezos said through a spokesperson that he has no intention of issuing new shares to take advantage of the rise, at least for the time being. If there were such a dilutive plan, the company wouldn't have issued $325 million in rather expensive junk debt, believes one analyst. Indeed, the interest among institutional investors in the debt was so great that it belies the notion that Amazon's stock-price jump is simply a creature of crazed and inexperienced retail investors: In early May, 10-year senior notes were issued at a very high 10% yield to maturity; major banks, brokerages and pension funds were reported to have literally begged to get into the high-yield bonds, which were rated "highly speculative" by Moody's Investors Service. Demand for the low-rated debt was so fierce that the offering was upped from an original $275 million to $326 million. The debt will keep Amazon's bottom line in the red until at least 2000 even though David Risher, senior vice president for product development, said the company has no specific use in mind for the capital. Essentially, he said, it's a bundle of cash to draw on for a rainy day -- or "future opportunities" such as acquisitions or expansion. and Uncle Lou's observations were interesting too: Veteran momentum investor Louis G. Navellier said he doesn't mind owning companies with no earnings or high price-to-earnings ratios "as long as there's incredible growth." But he says this one doesn't read well. "Amazon has hit our reward-risk criteria, and it's on our 'buy list,'" says Navellier, "But it doesn't pass our fundamental screens -- most notably it scores very poorly on our growth-to-relative P/E screen." In English, this means the rise in the company's stock price has outpaced its impressive growth rate. Investors and speculators may take delight in their 750% total return for the past 12 months, but a retailer selling at more than 400 times earnings expected in the year 2000? Navellier calls the recent rises and plunges of 6% to 10% a day "unreal" and believes that other momentum players in the market are milking the stock -- all the while preparing to unload.