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  • cpataxweb cpataxweb Nov 13, 2012 9:58 AM Flag

    When will Amazon file for bankruptcy?

    Their cash position relative to short tern liability is extremely dangerous. Since it is not profitable, it would be unable to issue debt. However, It can issue stock or preferred stock if market is still drinking kool aid at that time. Walmart can bankrupt amazon in 6 months if it decides to use its online to sell everything 10% lower than amazon. Walmart can easily take the loss, but not amazon.

    Sentiment: Strong Sell

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    • Even though I believe AMZN is overvalued by a factor of at least 10 and am playing the shorts. BK is unrealistic. AMZN has no debt and they can easily issue more shares.

      Sentiment: Strong Sell

    • WalMart will not have to do the heavy lifting. Amazon went directly after Apple's core business and opened a business model competition. Further, with its stupid anti-trust play on eBooks, it guaranteed that Apple can choose to sell eBooks at cost or even a loss (its loss leader versus AMZN's hardware loss leader), which given the immense number of iPads out there would hit Amazon's core source of cash flow VERY hard. That would be the nail in the coffin. Oh, and did I mention that Google doesn't like AMZN very much and can do the same on all Android and Chrome devices (Chromebooks are killing it right now... will show up soon). Open, cloud based eBooks standard will put AMZN into a world of hurt.

      WalMart and Best Buy matching prices on high value density items (where there is a store and service to support any problems) will create a selection bias in AMZN orders, pushing up shipping cost relative to item profit (and since shipping will be free for $7.99 a month Prime) will also hurt Amazon...

      Will be a fun year. Do not get impatient. Short responsibly or use on very LT puts...

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