Amazon’s Short Future
Amazon.Com (AMZN) once part of the fab four of internet, has since been a fallen angel. With profit margins shrinking to 3.25% and quarterly year-over-year earnings down 57%, the stock is over 40% off its 52-week high. With its most recent earnings, Amazon stock dropped heavily and has bounced some 13% in the last couple of weeks. I would take this opportunity to sell this stock. Here’s why:
Amazon is trading at a multiple of over 40. With revenues increasing at 20%, and negative earnings growth, that is a premium multiple, even for an internet company.
While Amazon is an internet company, it is really a retailer when it comes down to it. In other words, it should be treated like the Sears (SHLD), the Walmarts (WMT) and the Targets (TGT) of the world. Those guys sport multiples closer to 20.
Barnes and Noble (BKS) released earnings today and they were good. This is one company that has always considered Amazon a competitor. If we are to believe that, then either BKS is worth a lot more, or Amazon is worth a lot less. I believe its the latter.
With management looking tired and distracted, earnings lacking lustre and shrinking margins, Amazon is in fact a good play on the short side. I believe the stock is headed to the low 20’s and the recent bounce is simply what a friend of mine would call "a dead cat".
– Faisal Laljee
i first bought from them
in 1999. but where they
skrewed up was in forgetting
to send out reminder
email pages
to customers. then all the
fringe customers forgot
about them.
I didnt get 1 email from them
in 5 years, and now they are sending me 2+ per month.
One thing they are doing real good is the deal with Coinstar-cstr (own it). I cashed in a coffee can of coins $48 worth,
and accepted a Amazon.com gift certificate code instead of cash.
i save 8.9% on the coin processing fee, have prices as low as walmart, no sales tax,
free shipping, and great consumer report-ish ratings.
i wonder what e-commerce
company has potential.
i am dubious on the Knot,
Ebay, and Amazon. and recently
gave up on netflix. i wonder if
Blue Nile is any good.
I think the Baidu will be
something special, 50% of chinese seach market has last quarter is at an annualized run rate of $200 million. but that is a search enginee. maybe Tivo is an e-commerce company after all.