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Amazon - The Expanding Bubble

Jul. 23, 2013 10:45 AM ETAMZN
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Seeking Alpha Analyst Since 2013

Geppe has a passion for investing in the equity market. Geppe's equity research target any sector that fulfill certain criterias for investments. Geppe likes to find distressed equities which in the most optimal case have both a margin of safety in the valuation and products that have a durable competitive advantage. Geppe just recently finished his bachelor thesis in finance and have been active in the financial markets since 2007-2008. Also the head writer at value.inoxus.org. Are you interested in the current portfolio, analysis and more articles please contact hfv@inoxus.org for a signup for a newsletter.

Amazon (AMZN) sells digital content and merchandise to consumers with no durable competitive advantage. It might have efficient supply chain and personnel but certainly not a competitive advantage. In the end there is little profitability in this business and this is probably one of the reasons that detracts competition until the course is set for profitability which at that point is usually too late to enter the market. Secondly, it seems irrational to believe that any competitor could not do it any better than Amazon or at least as good as Amazon is currently doing its business. Amazon do not have any patent or technology superiority that will be enable them to repel competitors. Competitors will however have to work with the trust that Amazon provides to consumers. This barrier of entry can easily be breached by a few scandals or by more competitors' entering the market.

Let's have a look at Amazon's financial statements that I have compiled......

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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