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

To: JOHN W. who wrote (16786)	1/9/1999 12:53:00 PM
From: Mark L.	Read Replies (2) \| Respond to of 18691

"You think amzn will hit a 1000. what is that in mkt cap? It would be worth more than all of the american automotive industry and IBM put together???get real." Why is 1000 more absurd than the current market cap? In my opinion, the stock has become completely de-coupled from its fundamentals. It is now strictly a trading vehicle for gamblers. I have no doubt that at some point it will get re-coupled with its fundamentals, but I don't see why that will necessarily be before 1000. I have seen hardly any analysis from its proponents in the last few weeks that relates the stock to any fundamental data (and certainly not to free cash flow no matter how far in the future). I HAVE seen Meekerisms like "how do you value the most important company in the most important segment (e-commerce) in the most important advance since the Industrial Revolution." In other words, even the promoters believe the price is de-coupled since they believe attempts at valuation are fruitless. However, there is a concern here for fundamental investors, even at this absurd level. If Amazon chooses to get creative, they could extend this run-up for a long time. Already they are large enough to acquire large companies with long track records of free cash flow and bring the operations to the Web. For instance, they could now acquire TJX or ROST--designer-label fashions at fabulous savings over the Web with virtually no extra costs. And AMZN gets massive free cash flow. AND, if the concept doesn't work on the Web, big deal--the acquisition is still monstrously accretive to earnings. The write-off of Web development would be minuscule compared to the free cash flow. In other words, don't underestimate the power of a big company like AMZN whose nickels are worth a dollar.