Amazon Share Price “Inexplicable”

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Travis Hoium, from the The Motley Fool, posted his thoughts on Amazon’s share prices on the Daily Finance blog. He appears to be quite bitter about the fact that his short-sale bets against Amazon have turned out wrong, and he gives a lengthy explanation about why he really should have been right.

Which I find a bit amusing, since the market has spoken, and by his own admission, he has consistently been on the wrong side of his bets. About the only thing that proves is that the market is smarter than he is. By definition, the market is always right.

As an Amazon customer, I have a bit of a different take. Unlike Mr. Hoium, I think that Amazon’s plan of investing in the future does have merit. Hoium seems to have trouble with a large company thinking like a startup, but I think it’s pretty smart. From my own experience, I can see that Amazon has an understanding of the customer experience that is better than just about any other company I know about, and I think that is the key ingredient for future success. It’s possible for Amazon to make some mistakes in that area, but they have a track record of learning quickly from their mistakes.

I think that Amazon is just having some growing pains. I also think they are up against some interesting challenges, not the least of which is the pushback from a dying traditional publishing industry, which still exerts some power (and money) on the process of publishing books. We are living in interesting times, and I think that Amazon is quite well-positioned to deal with uncertainties.

Iconic Bezos Pose
Jeff Bezos Photo Credit: http://www.flickr.com/photos/44124348109@N01/5129286606

 

On the other hand, I do find it a bit curious that Amazon seems to be training its customers to expect e-books to be essentially free. Personally, I like “free,” but the vast majority of the free e-books I have seen so far have not even been worth the minimal cost of downloading and reading. With a few outstanding exceptions, of course. But training a large portion of your customer base to just wait until “free day” seems to me somewhat counter-productive for any business. I predict that there will be some more changes in that business model soon, but then, my crystal ball doesn’t always work very well. Just consider that Jeff Bezos is extremely wealthy, and I’m not. That alone proves he knows something I (and Mr. Hoium) don’t.

One thought on “Amazon Share Price “Inexplicable””

  1. I think the free days have merit for both publisher and consumer. For the publisher, they get their work in front of customers who would normally never even know they existed. For the customer, they get to check out a book by this publisher/author which could pave the way for them to purchase their next book.

    I agree with you that Amazon knows a LOT about consumer behaviour especially in light of social proof. I think it will continue to dominate for a long time to come.

    Dee

    Thank you for your feedback! –Howard

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