The Case FOR Amazon September 9, 1998February 6, 2017 From MNB, just before the market break: “Well, I am all ready to run off and short Amazon.com (and AOL for that matter). One lingering question, though. Most likely Amazon.com is overvalued by the market, but what if some big guy like Borders Books comes in and buys amazon.com to secure a larger online presence? I think Internet stocks will eventually fall out of favor, but I am worried that a company like amazon.com will be taken over for a significant premium before then.” Borders is too small to buy Amazon. But be very careful shorting it. As I suggested yesterday, these guys are pretty smart. Conceivably, Amazon will become one of a handful of global Internet retail access points – you need something (anything!), you go to Amazon – with, say, 50 million active users. At that point, five years from now, it could certainly earn $100 after-tax profit from each one, let’s say, which comes to $5 billion a year. At 20 times earnings, that would be a $100 billion market cap, or about 15 times what it is today. There are a lot of things that could go wrong with this scenario (most of them all coming under the heading competition), but unless/until some do, you could have the stock just keep climbing. So … don’t short it on MY account! [But I hope you did, because it was 115 when you wrote me this and 73 in the midst of last Monday’s big drop.]