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MARKET SAVVY | CONSUMER SAVVY / A Briefing for Investors

Amazon Stock Off 35% on Loss Fears

May 05, 1999|Bloomberg News

Who says fundamentals don't matter for Internet stocks?

Shares of online retailer Amazon.com tumbled again on Tuesday, losing $7.94 to $143. Since the stock's recent peak of $221.25 the price has dropped 35%.

Concern is growing that Amazon.com's plans for increased spending on promotions and new services will prolong losses--which the company admitted last week.

Chairman Jeffrey Bezos said that he plans to increase spending to expand the business, resulting in quarterly losses much larger than the first quarter's $36-million operating loss. "The reality is continuing to sink in," said analyst Sara Zeilstra of Warburg Dillon Read, who rates Amazon.com "hold." "It takes a lot of money and assets to build an e-commerce company."

The shares may also be hurt by speculation that CDNow, Amazon.com's main online music rival, may be bought by a larger company looking to expand online, analysts said.

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