Is Amazon stock a bubble?

When the dot.com bubbles burst in March 2000, it did feel as if Amazon got a get-out-of-jail-free card. Why is this company such a darling? How does it make money by giving aways its profits in massive discounts? Is the Kindle on its way to becoming the world’s most famous shelf-ware? How long can it go on defying gravity? And, the answer to that question seems, “Forever.”

It appears as if no one was willing to say, “The Emperor has no clothes.” Andy M Zaky, a contributor to Fortune, writes: ‘The online retailer's shares are valued at more than three times Apple's and more than two times Google's. And there's no reason why.’

He continues: ‘Whenever a stock can potentially drop 50% and still be considered overvalued, that's when you know the stock is a bubble. Amazon (AMZN) far surpassed bubble territory ages ago but investors still continue to plunge billions of dollars into the company. If the stock were to crash to $80 a share today from $164, it would still be trading at a significantly richer valuation than Google (GOOG), Apple (AAPL) or even Research in Motion (RIMM).”

Zaky doesn’t think it makes any sense, considering that both Amazon’s top (growth) and bottom line (profits) have underperformed compared to Apple, Google and RIM. ‘A company can always reduce costs and improve margins to move more of its revenue to the bottom line, but the hard part is actually producing, marketing and selling a product that people want to buy,’ he says. In other words, business is still about business.

‘When RIM was trading at $150 a share, sophisticated investors knew the stock was a bubble. This case is no different. There is no matter of 'if' in this analysis. It's a matter of 'when.' Amazon will lose 50% of its value over the coming years. At $150-$160 a share, investors are flirting with financial suicide,’ he concludes.

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Fortune

Bouqinistes of Seine-side sell cheap tourist trinkets

We all know how the French protect their independent booksellers and treat them like vintage wine. In Paris, Seine-side booksellers, known as bouqinistes, have existed in the city for 300 years and are a tourist attraction for book lovers from all over the world. They are famous for selling everything, from ancient editions of books to secondhand contemporary novels, engravings and prints, magazines, collector’s stamps and antique postcards. The city hall gives them their lots for free and they are exempted from paying taxes, in return for which they have to follow certain rules: they must sell books in three out of the four boxes in their area. The city hall says they have a duty to preserve a cultural heritage.

So, imagine the horror of the authorities when they discovered these shops selling cheap tourist souvenirs (surreptitiously) to augment their income. The problem is that they are located in tourist areas and most of the tourists don’t read French, and plastic Eiffel Towers sell better than used books.

Twenty odd booksellers waged war with established bookseller, in 1620 to be allowed to sell their books under the bridge. It was during the French Revolution that these became a permanent feature. Napoleon 1 allowed these bouqinistes to spread out from Quai Voltaire to the Pont Saint-Michel, but they were not to sell anything “immoral.” Napoleon III allowed them to install boxes filled with books on the parapets of the quays on the Left Bank, and city hall handed out permits each year.

Today, there are 216 bouquinistes along the Seine selling 400,000 books, and the city hall warned 40 of them to stop selling tourist trinkets. The city currently has 100 applications for 22 lots remaining; obviously there is still a demand for selling books by the Seine -- with or without plastic Eiffel Towers.

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Publishing Perspectives