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

To: Curlton Latts who wrote (40182)	2/15/1999 3:36:00 PM
From: Rob S.	Respond to of 164684

I agree . . . but this argument is still lost on most investors. The OTHER argument - that Amazon purposely intends to loose lots of money now so that they can reap profits latter is more difficult to prove one way or the other. In the present moment the only things that are certain and obvious is that AMZN's sales have grown rapidly and that they have incurred huge debt and losses in the bargain. It isn't certain that they can or can't make a profit if they pull back on expansion and other expenditures. They say that the book business is now marginally profitable but that is meaningless in the face of debt and rising costs of new facilities and personnel. Let's lay it out like this: Let's pose two theories of how Amazon's business might evolve: Theory 1 is that Amazon will be able to grow their business on the back of huge debt to some point at which they can scale back expenditures as a percent of sales and sales will be largely self perpetuating. Theory 2 is that price competition and other factors won't allow them to scale back the marketing budget as much as is needed and price competition will drive down margins to the point that profits will be marginal at best. Speculation that Amazon will accomplish either of these outcomes is still just speculation. Neither you or I or any ANAL, no matter how many studies or spread sheets they have concocted can answer the question of which theory is correct. IMO Amazon will become a profitable company with several billions in sales but with a very low level of profit margin. But current speculation (as reflected in the stock price) is that Amazon will be highly profitable with relatively fat margins. The stock price already anticipates great results a few years out. The price doesn't reflect the risk or uncertainty that will become more apparent by the middle of next year.