Online bookseller Amazon?s shares soared on Wednesday, following favourable, if misleading, comments from a Wall Street analyst.
Henry Blodget of CIBC Oppenheimer sparked a beanfeast by raising his target share price for Amazon to $400. But although he issued a clarification later, indicating that the $400 was a 12-month target only, the buyers kept on buying.
After peaking at $300, Amazon?s shares finally closed the day at an amazing $289, up almost 20 per cent. Unfortunately, however, even if Blodget?s prediction is correct, the annual return on the bookseller?s shares would be no more than average for a high-tech stock.
But this is only the latest in a run on Amazon?s shares. Its stock price has tripled in the last two months, fuelled by its venture into music and video sales, resulting in an almost 10-fold increase since the start of the year.
Despite growing sales and high brand-awareness, Amazon has still to prove it can make a profit, however. The company lost $45.2 million, on sales of $153.7 million in its third quarter, and generated an operating loss before acquisitions of $21 million.
It now has a market capitalisation of more than $15 billion, seven times that of traditional ?bricks and mortar? bookseller, Barnes & Noble, which lost $4.6 million, on revenues of $674, last quarter.
Barnes & Noble?s own online business, which German publisher Bertelsmann AG now half owns, turned over a mere $22 million in the first half of 1998.
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