In its second-largest acquisition, Amazon buys the company for $970 million.
"It's only a matter of time until Amazon turns the skeptics into believers," says the latest analyst's report from JPMorgan. "Some of the skeptics will hold on to their pessimism through 4Q:01, doggedly waiting for the company to become operating income positive across all of its business units. Other investors will get in now, and reap the rewards." JPMOrgan bases its rosy outlook on this week's announcement that Amazon.com 's third quarter revenues hit $638 million, 79% above the prior year--8% above JPMorgan's $593 million estimate and 6% above consensus. Pro forma EPS came in at $(0.25) beating JPMorgan's target of $(0.32) by seven cents due to higher sales and gross margins coming in 180 basis points above estimate. "We reiterate our buy rating with a year-end 2000 price target of $50 - $60, and 12-month price target of $90. Amazon.com is solidly on the path to profitability. We see AMZN as a stocking stuffer at today's price, or tuck it away for the long haul and watch it become another AOL, CISCO, Microsoft, Wal-Mart, Home Depot, take your pick.Watch for the stock to nearly double to $50 -$60 between now and Christmas 2000 as the media swings into high gear next month describing shopping in the new economy, and AMZN receives accolades for last holiday's delivery performance (99.9% of their outbound packages arrived on time). We think history has a way of repeating itself. AMZN's share price doubled from August through year-end the past three years in a row, coming out of stormy summer trading sessions full of skepticism into the full bloom of robust holiday sales."