Signs of Change at Amazon? A Book Nerd Notices Higher Prices

When I worked at the New York Times (NYT), the guy in the next office, reporter David Streitfeld, knew a lot about many things, but the thing he seemed to know the most about was books and how they were priced.

Thus, when I read this post last week about signs – yes, anecdotal – of rising prices at Amazon (AMZN), I took note.

Could Jeff Bezos & Co. finally be trying to make Amazon not just a dominant online retailer, but one with a decent profit margin, too?

AMZN Revenue TTM Chart

AMZN Revenue TTM data by YCharts

If Streitfeld is onto something, and he often is, the implications for investors are large. Higher prices could very likely result in slower revenue growth at Amazon, and, given that investors have been valuing the company based on revenue growth, that could mean a tumble in its shares is ahead if Bezos starts raising prices across the board.

AMZN Chart

AMZN data by YCharts

Longer-term, a slower-growing-yet-solidly-profitable Amazon would make for a better investment that the overheated stock of today. But finding an entry point will be difficult. Elsewhere, a less-aggressive Amazon could be very good news, indeed. Best Buy’s (BBY) survival chances would improve, as would Barnes & Noble’s (BKS), and margins at Target (TGT) and Wal-Mart (WMT) might be under less pressure.

By the way, David isn't the only person who knows something about book pricing. The comments that follow his New York Times post are smart, as well.

Jeff Bailey is the editor of YCharts, which includes the just-released YCharts Pro Platinum for professional investors.



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