Amazon Sinks as Growth Worries Resurface

So much for a sustained holiday bounce for e-tailers.

Banc of America Securities analyst Tom Courtney said Tuesday he's becoming "incrementally more cautious" on Amazon(AMZN Quote) shares. E-tailing shares, in turn, responded by moving incrementally lower.

Courtney, who rates Amazon a market performer, said in a note that his warier stance comes because the company's rate of growth will slow "considerably" in 2001 even as its timeline to profitability remains unclear. (His firm hasn't done recent underwriting for Amazon.)

Courtney's concerns about Amazon aren't new. First Call/Thomson Financial reports analysts' consensus for fiscal 2000 revenue is $2.78 billion, which would represent an increase of almost 70% from last year's $1.64 billion. Fiscal 2001 revenue, however, is projected to be $4.04 billion, which would represent an expected increase of 45%. The specter of slowing revenue growth has been an issue for Amazon for months. And the murky path to profitability? Please. Those Amazon.org jokes (get it? nonprofit?) have been circulating for at least a year.

Still, these stocks are extremely sensitive to any conceivable piece of positive or negative data. (On Black Friday, amid optimism about holiday shopping, investors bid up Amazon shares by about 15%.)

Amazon's shares fell $2.69, or 9.6%, to $25.31 in early afternoon trading after earlier dipping as low as $24.75. Other e-tailers followed, though when your stock's at less than $2, every little blip makes a big percentage difference): Buy.com (BUYX Quote) fell 20%, eToys (ETYS Quote) shares declined 27% and even eBay (EBAY Quote), which doesn't depend on the holiday season for a big chunk of sales, fell 6%.

Get used to it. As the holiday approaches and data trickles in, the only thing to count on in e-tail trading is volatility.