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Amazon to $800 in 2014

These metrics matter just as much:

  • More than half of Amazon customers shopped using a mobile device this holiday.
  • Between Thanksgiving and Cyber Monday, Amazon customers ordered more than five toys per second from a mobile device.

You see what's happening here, don't you?

Amazon is building out a massive ecosystem consisting of millions of Prime members and an army, quite obviously, in the hundreds of millions who go to the site for their every need across devices. And when Amazon provides them unparalleled customer service -- across the board -- not only are they compelled to come back, they want to come back because it's fun.

Being a Prime member is fun. And addicting. Receiving an item you ordered one day the next or watching Sunday delivery actually happen. It's all fun. It's the type of pollution-free air you like to breathe and want to breathe again in an era when such flawlessly-executed retail and customer service experiences come so few and far between.

Venture capitalist Jason Calacanis wrote an excellent essay way back in January 2012 that nicely articulated the lure of Amazon Prime.

Some of the things Calacanis said nearly two years ago now:

And to be clear, Prime is a cult you will be joining.
Prime is at a tipping point.
One in three American households will have Amazon Prime (or have access to Prime) in the next four years.

We're halfway there (and I bet ahead of schedule) but we're not livin' on a prayer because, as Calacanis noted:

Our leader is Bezos.

That's the type of analysis investors needs to be on the look out for. Analysis that precedes about 128% worth of upside. Not the tripe that comes out of the value investing camp.

Amazon has teed up the metrics that matter for you once again. You can choose to ignore them. You can criticize me because I didn't print something more like this to justify my AMZN bullishness:

Our $35 PT is based on our DCF model through 2020, which assumes a 12% cost of capital, 4% terminal growth rate and a 13.0x terminal EBITDA multiple. Key Drivers of our DCF projection include 2012-2020 CAGRs of 37% and 114% for Revenue and EBITDA. Our PT is also equates to ~7x FY2015E revenue of $958M.

Yes. That's from a Pandora (P) price projection, but it's my favorite sample of Wall Street analyst geek speak meant to say you're wasting your time dealing in all of this at 10X earnings based on this model or that model we think AMZN is fairly valued at XYZ crap. It's all a pointless exercise.

Ignore me. Cast me off. Don't read what I have to say. Discount my 2014 $800 AMZN price target as not supported by anything other than opinion (not true). You'll be ignoring another example of analysis that, in the current century, means more to investors and smart observers than any part of the status quo traditionalists try to keep alive.

--Written by Rocco Pendola in Niagara Falls, New York

Stock quotes in this article: AMZN 
Rocco Pendola is a columnist for TheStreet. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.

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