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Investing

The Good, The Bad, And The Insignificant: Amazon Hits All-Time High

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By Douglas A. McIntyre Updated Published

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Verdict: Bad

Shares of Amazon.com hit an all-time high of $181.84 today. As a reference, the stock traded at $90 during the peak of the 2007 holiday season – perhaps the best in US history.

Analyst estimates for sales and EPS may justify the share price. The median estimate is that revenue will increase 35% to $12.84 billion in the current quarter. EPS is expected to rise from $.85 to $.88–a very modest increase.

Amazon.com has to clear two hurdles to justify its stock price. The first is that e-commerce sales will have to be strong this holiday season. Amazon.com might outperform the industry, but it will be hard for it to reach extraordinary results if the economy does not cooperate.

Amazon.com also has to post good margins. Wall Street has attacked the company in the past for high marketing costs and the cost of free shipping. Amazon.com margins could also be harmed by strong sales of the Kindle. Some experts believe that it is a loss leader to help Amazon to sell e-books from its 750,000 title library.

The e-commerce site will have to reach a very high bar to keep its share price near its current level and that is probably too much to ask.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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