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I remember the late 1990's, when Amazon.com, Inc. (NASDAQ: AMZN ) became a momentum stock and it has never looked back. Back when you could only get real-time quotes on the phone, and I was astonished as AMZN stock went up $40 in a day, and kept going.

Could Amazon.com, Inc. (AMZN) Become an Airline? Source: Shutterstock

Between June of 1998 and September of 1999, at the height of the Dot-com bubble, Amazon stock split three times (12-1 in total). I refused to believe an online book seller could be worth what people were paying for AMZN stock.

Here we are almost twenty years later, and Amazon stock is not only the king of retail, but it has expanded into multiple arenas, and become a $405 billion company. In all that time, it's hard to believe, but AMZN stock has only generated about $5 billion in net profit.

That's right. Amazon stock isn't just trading at 81x profit. It's trading at 81x total historical profit. It's time to admit that, yes, this time it is different, at least in regards to valuing AMZN stock. The market seems to have its own logic on this one.

Amazon Stock Is Hard to Pin Down

What I suspect is happening is that investors know that if Jeff Bezos cared about the stock and wanted to report regular growing profits, he could. Instead, he is the ultimate disruptor, and so he has disrupted how the market even thinks about Amazon stock.

Amazon is an "anything" company. It can and will do anything Bezos wants. Believe it or not, I think that down the road, Amazon is also going to become an airline. But not just any airline.

Let's take a step back.

We already know that Amazon has contracted with two airlines. As I wrote last September, AMZN "announced a partnership with Atlas Air Worldwide Holdings, Inc.  (NASDAQ: AAWW ), in which AAWW will both acquire and operate twenty Boeing Co  (NYSE: BA ) 767's to deliver Amazon merchandise. This was the second deal AMZN made  in this arena, just like it had done with Air Transport Services Group Inc. (NASDAQ: ATSG ) in March".

My theory was that Bezos took warrants in these companies with the intent to buy them in the future. Indeed, AMZN owns warrants to buy 30% of AAWW at $37.50 per share, and the stock is now in the mid-$50's. It owns warrants to buy 20% of ATSG at $9.73 and the stock is at about $17.

Amazon will buy out both companies in full, I believe, to have total control over deliveries and not have to pay and rely on FedEx Corporation  (NYSE: FDX ) and United Parcel Service, Inc. (NYSE: UPS ).

Amazon will merge these two companies under its umbrella and Amazon Air Cargo will be created, and possibly even spun off. It might even undercut FDX and UPS to rent delivery space on its planes for other businesses, just like it did with the large brick-and-mortar bookstores.

Bottom Line on AMZN Stock

I'll take it one step further. Imagine Amazon.com needs to deliver goods across a few hundred miles somewhere. There's some kind of cost inefficiency in flying short haul, so Amazon opens up a passenger/cargo airline. In the old days, you could get a courier fare if you were willing to just get a seat with no baggage and your luggage space was taken up by a company that needed to deliver something on a commercial flight.

Same thing: AMZN runs a discounted, short-haul airline for people with hand baggage only. Amazon gets its goods where they need to go, and passengers get cheap fares.

Yes, it's a long way off. There will have to be complex issues dealt with, such as getting gates at various airports. Yet, like Southwest Airlines Co  (NYSE: LUV ), we've learned that these secondary airports can be a useful tool.

Pie in the sky? Maybe. Yet that is how the market values AMZN stock - for its disruptive potential across all sectors.

Lawrence Meyers is the CEO of PDL Capital, and manager of the forthcoming Liberty Portfolio stock newsletter. As of this writing, he owns ATSG and AAWW. He has 22 years' experience in the stock market, and has written more than 1,600 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.

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