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Amazon.com, Inc. Message Board

  • canstic canstic Jan 9, 1998 11:01 PM Flag

    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............;^)

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • ...are starting to sound desparate! always a good sign for the bulls.

    • 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

    • 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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