Site Meter My Stock Winners » Blog Archive » The Best Time to Short AMZN is NOW –1/8

The Best Time to Short AMZN is NOW –1/8

by Rick

The Best Time to Short AMZN is NOW –1/8

AMZN is a compelling short at current levels. AMZN has shot up over 100% in the last 6 months, most recently on its “blowout q1″ earnings report, a typically seasonally weak quarter in which AMZN reported EPS higher than their seasonally strong q4. Revenue growth has accelerated, and high hopes for new initiatives (digital distribution, web services, etc.) have fueled a speculative furor not seen in the name since the height of the boom. Analysts are excited by the prospect of amazon as a “media” company, rather than a online retailer of low margin products, trading at a over 100x earnings, with PEG multiples higher than GOOG and EBAY, both of which are more attractive, higher margin businesses.

For a variety of reasons, I believe these growth avenues are overblown, and that AMZN is more likely than not a leading online retailer with a strong online marketplace, low operating margins, and moderate but not spectacular growth going into the foreseeable future. I will argue that even if AMZN overnight became a leader in all areas they hope to grow into, the company would still be overvalued and likely to disappoint given current expectations. AMZN is overpriced on both an absolute basis, as well as relative to peers, and could see a upwards of a 30% drop based solely on a return to its prior lofty valuation levels, or upwards of a 50% drop if valuations were more in line with comps (which, arguably, are overvalued themselves), and potentially see further decreases as new ventures fail and their core retailing business receives continued pressure from offline and other online retailers, as well as the inevitable levy of an internet sales tax, which could wreak havoc on already tiny margins. Given the high PEG, as well as revenue and earnings growth going forward, I believe the risk of multiple expansion or multiples staying the same is relatively low, and that AMZN is an attractive low risk/high reward short.
amzn.png

To be Continued….
(Meanwhile, here is a link to see my past articles of some good picks:)
http://www.mystockwinners.com/category/weekly-pick/


Leave a Reply


About My Stock Winners

MyStockwinners.com is a Free Online Community that will help you trade better! It is designed for both long and short term investors. You can discuss penny stocks and big board stocks. Here you'll also find resources and information to make more money and educate yourself further in the amazing financial world. You will also find the most current stock trading tips, picks and strategies. It is focused on you. Just come join us!

My Stock Winners Author(s)
    » Rick

Business & Finance Channel Posts

  • The immaturity of corporate america
    Have you ever felt like this? [caption id="attachment_162" align="alignnone" width="300" caption="Stay Away!"][/caption] When I was a kid we used to get these little cards sometimes that had a [...]
  • YouTube, Copyright, and the DMCA
    Yesterday saw a possibly dramatic development in the YouTube world. The DMCA (digital millenium copyright act) includes a provision designed to address the concerns of copyrght holders over the [...]
  • Jackson Browne and John McCain
    Sometimes you get a say, and sometimes you don't. Jackson Browne alleges he should have had a say is whether his recording of his song was used in a political commercial for John McCain, and he's [...]
  • Court Reinforces Control Concept in Copyright
    It seems obvious, but it never hurts to have a court say it's true. Money is not the only thing that makes the world go 'round, and free does not mean anything goes. Briefly, an open-source [...]
  • Scanning Photos
    Photos, of course, are covered by copyright. If you've ever been married, or had professional head shots taken, or you have kids whose after school activity hired a professional photographer to take [...]
  • Email - what happens when you die?
    Every original work of authorship that is fixed in a tangible form is protected by copyright. That includes letters and - these days - email. Which means that when you die, those emails may be part [...]
  • O-Blige Me, Mary
    [caption id="attachment_212" align="alignleft" width="200" caption="Broadcast"][/caption]Work-for-hire rules can trip up more than just the authors. The general rule is that copyrightable work [...]
  • Magic Copyrights
    Just thought I would note that copyright registration is not a magic thing. It does two main things for you: 1. protects your interests in the event of an infringement 2. makes it slightly [...]
  • Motivational Quote of the Day
    "Throughout the centuries there were men who took first steps down new roads armed with nothing but their own vision." - Ayn Rand (1905 – 1982), novelist, philosopher, playwright and [...]
  • Presentation and Communication Skills Workshop in Phoenix
    Founded by Professional Actors and Fortune 500 Executives, Pinnacle Performance trains globally, using it's time-tested Performance-Based Training Method™ to teach business professionals the [...]

Hot Off The Press