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

To: Glenn D. Rudolph who wrote (38810)	2/8/1999 4:56:00 PM
From: Alomex	Read Replies (1) \| Respond to of 164687

I am not sure AMZN fits the three years or less for profitability, but apparently the market does which is what counts. Well, it did at the time. Let's do the math and see if it still does: With a 17 billion market cap, and a P/E of 25, AMZN's valuation currently presumes future earnings of 680 million dollars a year. Margins in the book business and in e-commerce seem to be paper thin (3-6%) therefore, the current valuation of AMZN presumes yearly sales of 11,200 to 22,400 million dollars. On the optimist end at 6% margins and growing at 35% per quarter it would take them exactly three years from now to justify their market cap. If we consider a conservative 3% margin and 30% per quarter growth (if you could call that conservative) it would take them four and a half years to justify their valuation. So AMZN falls squarely into the gray area of 3-5 years where you might or might not short it. It is interesting to see that using this measure AMZN has become even more overvalued, as a percentage of sales, than what it was a few years back when revenues were but a small percentage of their current levels.