Net Stock Beat: Amazon's Up! UBid's Down! Reason's in Short Supply

Jan 08 1999

Say you're an editor, and you have to decide among these stories: the iMac will now come in multiple colors; set-top box deals are going down at the Consumer Electronics Show; Amazon.com 's stock went up again. The Washington Post, which has covered all three to some extent, felt it necessary to put Amazon's rise on page F03 today, with analysis by Stephen Mufson, who seemed entrenched in a new "Net stock mania" beat. The big news? Amazon.com was up $20.875 to $158.875 , besting CIBC Oppenheimer analyst Henry Blodget's $400 target. Mufson told us breathlessly that CEO Jeff Bezos is now worth $2.92 billion, and that Blodget is optimistic that Amazon's margins will increase to 12 percent. Other analysts scoff at that figure, and expect more like 3 percent.

But while Mufson was chit-chatting with analysts, the New York Times' David Cay Johnston reported a bit of actual Amazon news. The online-retailing giant has leased a large warehouse space near Reno to beef up distribution. Johnston wrote, "The warehouse should help Amazon.com increase its operating margins, several analysts said, by capturing profits at both the retail and distribution levels," and suggested Amazon.com isn't interested in buying the No. 2 book distributor, Baker & Taylor , after all.

Back in the world of analysts and billion-dollar valuations, CBS MarketWatch's Darren Chervitz couldn't contain his astonishment that Merrill Lynch Net analyst Jonathan "Amazon's only worth $50" Cohen rated uBid as "near-term neutral." And Merrill had underwritten the Web auction house's IPO! But upon further review, it turns out Cohen rated it a "long-term buy" and was still bullish enough to keep uBid's CEO happy. Still, uBbid's high-flying stock dropped almost two points to close at 119.25, lowering its market cap to $1.1 billion. Chervitz said it's another case of supply and demand - not product supply, but stock supply, with a tiny float of less than 2 million shares. And who's been driving the stock upwards? Why, those naughty individual investors, Chervitz deduced from the small share blocks being passed like hot potatoes.

Amazon's Stock Price Soars
Washington Post

Amazon.com Is Adding a Warehouse
New York Times

Merrill Lynch Neutral on uBid Stock
CBS MarketWatch