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Amazon.com, Inc. Message Board

  • rimpinths rimpinths Jan 23, 1998 7:21 PM Flag

    More fun with numbers

    I mentioned in my last post that a 74% gain in revenue isn't all that great when you compare it to B&N's 66% gain and Border's 76% gain that they enjoyed during 1996 Christmas season.

    Why don't we take that into account and seasonally adjust Amazon's growth rates? Using the quarterly results of Border's and B&N from 10/31/96 to 10/31/97, we can determine what percentage each quarter accounts for of their annual revenue. We find this: Q1, 21.9%; Q2, 22.4%; Q3, 22.5%; and Q4, 33.2%. Using these numbers, we can extropolate what Amazon's yearly results would be based on each quarter's results.

    Here's what we find:
    Q1, $73 million.
    Q2, $125 million, a 70% growth.
    Q3, $168 million, a 35% growth.
    Q4, $235 million, a 18% growth.

    I should note a few flaws in this model. First, the fiscal year of Amazon versus every other bookseller is off by a month. Q4 for Amazon is Oct-Dec, whereas other booksellers report Nov-Jan. (That's because Amazon tries to pass itself off as a tech stock.) Second, the sample size isn't really large enough to be completely confident in the results. (Hey, I'm not writing a doctoral thesis here!)

    If we do assume that this model is accurate, you can plainly see that Amazon's growth rate has been cut in half each of the last three quarters. If that pace continues, Amazon will max out revenue at about $275 million by the end of 1998. $275 million is half of what most analysts predict is Amazon's break-even point: $550 million.

    74% sales growth is no beaut. They better start selling those ads for cyber-tulips soon!

    Rimpinths

 
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