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PROOF that the market is not rational

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January 31, 2012 – Comments (9) | RELATED TICKERS: AMZN

I don't follow Amazon the company and all of their strategic moves...I do however shop there a lot.

This is the extent of the due diligence I did on the company a few months back.  It took me...I think it was 2 minutes, but it may have been less.

The company said two things: 1) We are selling kindles at a loss (to eat apples market share...which it did not do at all)  2) we are projecting a possible loss

 

And now the company, which trades at 100 TIMES EARNINGS,  is down 9% after hours...because they are predicting a loss and they sold kindles at a loss.

 

Wow what a shocker, so hard to predict!

Great company for consumers, not really looking to sharp in the short term for investors.

9 Comments – Post Your Own

#1) On January 31, 2012 at 5:57 PM, Momentum21 (86.23) wrote:

I guess you should have shorted it and collected the premium then, right? : )

There is an extent that money managers have to invest in AMZN because of its quality. When you figure that variable out by doing 2 minutes of DD then you can open your own shop and rake it in.  

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#2) On January 31, 2012 at 6:00 PM, portefeuille (99.60) wrote:

not really looking to sharp in the short term for investors

I think AMZN shares will do alright in the next few weeks. They have done great since the 1997 low. The May 1997 split-adjusted low of the price of AMZN shares was at around $1.31. There are currently 320 AMZN shares in my "fund" with break-even of around 87.00 USD.

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#3) On January 31, 2012 at 6:14 PM, portefeuille (99.60) wrote:

320 AMZN shares in my "fund" with break-even of around 87.00 USD

now 250  shares with break-even of around 61.46 USD.

No one wants to follow me on twitter, grrrr ...

http://twitter.com/portefeuillefun

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#4) On January 31, 2012 at 6:32 PM, Oscanana (< 20) wrote:

Been following this company for 12 years and believe Bezos is a genius.  Prime members get better and better movies and tv show selections.  Watched the whole 24 series 8 seasons the past month all comes with Prime membership.  My Kindle was damaged  (went swimming by accident) and was replaced for 40 bucks, free shipping within 2 days with library intact.  These things will separate Amazon from competition.  On the down side, their pricing has increased in the last month for many items to the point that Walmart online ordering is a better deal even with Walmart's 99 cents per item shipped under 45 bucks per order.  Walmart is getting smart with its online ordering system and improves steadily.  For me, both companies are the big, long-term winners of the century, with Apple riding high on the mountain top of course.  I appreciate what the bears say about the different ratios and margins and don't deny any of it; but, I believe it is inconsequential and growth will ultimately win out.

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#5) On January 31, 2012 at 6:38 PM, portefeuille (99.60) wrote:

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#6) On January 31, 2012 at 10:44 PM, Valyooo (99.37) wrote:

fierce competition portfeuille....friendly competition for who has the higher ranking by june 1?  dont pull the "you redthumb etf and i dont" care hehe

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#7) On January 31, 2012 at 11:30 PM, SultanOfSwing (97.25) wrote:

In 22 of the last 28 quarters - through the Great Recession, mind you - AMZN beat earnings estimates.  That seems pretty good for an S&P 500 consumer products company.  That was 1 minute of d.d.

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#8) On January 31, 2012 at 11:43 PM, Valyooo (99.37) wrote:

We are talking about a company with 35 billion in revenue, without a lot of capex (if i recall correctly), with declining earnings.  They sell their new most popular item at a loss, to shove apple off the scene...the apple that just blew away estimates by 25%

 

I own a kindle.  Everything I buy is from amazon.  but the margins are awful, and its not like the internet is brand new where there is so much growth left in e-tail.

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#9) On February 01, 2012 at 2:39 PM, SkepticalOx (99.44) wrote:

Everything I buy is from amazon.  but the margins are awful, and its not like the internet is brand new where there is so much growth left in e-tail.

I don't agree with that statement. My sibling who lives in the USA has Amazon Prime and stuff, and it is far more convenient to purchase from Amazon in the USA then it is, all the way up here in... Canada (yes they have Amazon Canada, but things are more expensive and the choices are far less).

There are a lot of things that can still be bought over the internet that haven't yet, and there's still a lot they can do internationally. 

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