Amazon.com Inc. Message Board
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Good reasons to SELL AMZN.......
Here are a few reasons to sell your longs and go short:
1) For starters at todays close AMZN was valued at about 1.3 billion dollars. Their sales last year
were about 90 million. Compare this to Barnes and Noble(BKS) with a market capitalization of
about 2.2 billion and sales of almost 2.5 billion dollars.....
2) There is enormous competition in the book market and contrary to what people think there are
around 10 different sites on the internet to buy books, and Borders(BGP) will be coming online by
yearend.
3) Because the superstores like BKS and BGP do so much more in sales, they can negotiate better
bulk deals from publishers.....ie. their costs are lower for books, therefore they can underprice
AMZN easily.
4) Only about 10% of America is online....a large part of those are minors....only adults with credit
cards who are online can buy from AMZN. BKS and BGP have enormous superstores all over the
country AND are online. They can sell to everyone, AMZN's market is severly limited to internet
users.
5)The float in AMZN was 3 million shares when it came public. There was also 19.3 million shares
held by insiders, that were "locked up" for 6 months. That lockup period is now over. That means
that those shares can now be freely sold on the open market. Not to suggest that they will all come
out at once, BUT there is so much profit in them that a large portion are sure to find their way into
the float over the next few months. If nothing else it will be a huge overhang , causing a top for a
long time.
6) It is very common for new issues to do this 'small float' initial offering and lock up the rest. That
makes it much easier to hype up the stock since it is thin. Then the insiders sell their lockup shares
at substantial profits.
7)The company has NO earnings. They are forcast to have large losses for 1998. There is a price
war going on between the booksellers. I don't see how AMZN can compete, let alone turn a profit
for at least 2 years. Therefore they must borrow to fund operations. Since they are an unproven
new company, the cost of borrowing is substantially higher than BKS and BGP.
8) It is widely rumored that AMZN is preparing to do a secondary. They need to raise more money
to stay afloat. This will further dilute your holdings.
So, as you can see there are many resasons NOT to own AMZN. There are actually many more
reasons but I will get them another time. Suffice it to say that there are enough reasons to sell it
short. I believe AMZN will eventually trade all the way back down to the IPO price this year,
somewhere between 10-20 dollars. Maybe even sooner if the market starts to scare out due to the
Asian crises. Nervous shareholders will quickly dump the highflyers like AMZN to preserve profits,
especially when they realize how quickly it can turn, such as todays 4 1/4 point drop. Best of luck
to you,.....please consider these facts, but don't take my word on it, do the homework
yourself............;^)-
...are starting to sound desparate! always a good sign for the bulls.
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My, he waxed eloquently in January of 1998. I
hope he bought a Pete Best perpetual kicking machine
(Best left the Beatles because he thought there was no
future with them)
Good reasons to SELL
AMZN.......
by: canstic 144 of 121689
Here are a few reasons
to sell your longs and go short: 1) For starters at
todays close AMZN was valued at about 1.3 billion
dollars. Their sales last year were about 90 million.
Compare this to Barnes and Noble(BKS) with a market
capitalization of about 2.2 billion and sales of almost 2.5
billion dollars..... 2) There is enormous competition in
the book market and contrary to what people think
there are around 10 different sites on the internet to
buy books, and Borders(BGP) will be coming online by
yearend. 3) Because the superstores like BKS and BGP do so
much more in sales, they can negotiate better bulk
deals from publishers.....ie. their costs are lower for
books, therefore they can underprice AMZN easily. 4)
Only about 10% of America is online....a large part of
those are minors....only adults with credit cards who
are online can buy from AMZN. BKS and BGP have
enormous superstores all over the country AND are online.
They can sell to everyone, AMZN's market is severly
limited to internet users. 5)The float in AMZN was 3
million shares when it came public. There was also 19.3
million shares held by insiders, that were "locked up"
for 6 months. That lockup period is now over. That
means that those shares can now be freely sold on the
open market. Not to suggest that they will all come
out at once, BUT there is so much profit in them that
a large portion are sure to find their way into the
float over the next few months. If nothing else it will
be a huge overhang , causing a top for a long time.
6) It is very common for new issues to do this
'small float' initial offering and lock up the rest.
That makes it much easier to hype up the stock since
it is thin. Then the insiders sell their lockup
shares at substantial profits. 7)The company has NO
earnings. They are forcast to have large losses for 1998.
There is a price war going on between the booksellers.
I don't see how AMZN can compete, let alone turn a
profit for at least 2 years. Therefore they must borrow
to fund operations. Since they are an unproven new
company, the cost of borrowing is substantially higher
than BKS and BGP. 8) It is widely rumored that AMZN is
preparing to do a secondary. They need to raise more money
to stay afloat. This will further dilute your
holdings. So, as you can see there are many resasons NOT to
own AMZN. There are actually many more reasons but I
will get them another time. Suffice it to say that
there are enough reasons to sell it short. I believe
AMZN will eventually trade all the way back down to
the IPO price this year, somewhere between 10-20
dollars. Maybe even sooner if the market starts to scare
out due to the Asian crises. Nervous shareholders
will quickly dump the highflyers like AMZN to preserve
profits, especially when they realize how quickly it can
turn, such as todays 4 1/4 point drop. Best of luck to
you,.....please consider these facts, but don't take my word on
it, do the homework yourself............;^)
--------------------------------------------------------------------------------
Posted: 01/09/1998 11:01 pm EST as a reply to: Msg 1 by
YahooFinance
View Replies to this Message- 1 Reply to rukdn
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is still struggling with 17 -5/8. What a beauty. Folks relax, the market and AMZN is recovering. The Internet industry is UPPPPPP!!
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Very informative indeed....
I truly appreciate such thoughtful posts here, whether bull or bear.(canstic, fred, ron,..and many others)
Thank You. -
Very Informative Post...
I've been thinking about shorting this for a while... I haven't shorted before, too bad I didn't pull the trigger earlier this week.
I'd like to hear some equally informative rebuttals...
Your analysis is scary for those going long, alot more than any name calling and YELLING.
el loco one
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