The Best Time to Short AMZN is NOW –8/8
The Best Time to Short AMZN is NOW –8/8
Though I am usually hesitant to short high growth names, I believe the risk with AMZN is relatively low. Given memories of the internet bubble, and valuations significantly above other internet companies with superior growth profiles, I find it hard to believe that AMZN could achieve additional multiple expansion.
Also, given my low expectations from growth initiatives, I don’t believe we’ll see AMZN as anything more than a 20% grower in a low margin retail business which, if correct, will be rewarded with a much lower valuation than experienced currently.
Likely worst case scenario in my mind is that AMZN grows into its valuation over the next couple years and the stock moves nowhere. One option for the risk adverse would be to do a pair trade with GOOG and/or EBAY and profit from the multiple compression while hedging out some risk that the market continues its irrational pricing of some internet stocks.
Potential catalysts:
-Continued failure of new initiatives
-Internet sales tax is enacted or gains momentum
-Increased competition from niche players and offline companies building out an online presence.
-Rotation away from the internet names
-Unexpected tax rate fluctuations in upcoming quarters
Disclosure: I am currently short AMZN.
And
Amazon Senior Vice President and Chief Financial Officer Thomas J. Szkutak Sells 26,000 Shares on 10/4/2007
With September out of the way, what’s left to fret? Investors have been spooked by October’s reputation—not because of Halloween—but because it has been a bottoming month for many market meltdowns: Five of the last nine bear markets in the past 50 years ended this month. It also hosted the granddaddy of all crashes, in 1929, and a pretty fair-sized “market break” in 1987.
Here is a link to see my past articles of some good picks:
http://www.mystockwinners.com/china-stock-watch-vcdyob/
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