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Finally Time to take a Short position on Amazon? Finally Time to take a Short position on Amazon?

02-06-2014 , 12:26 AM
Are investors finally fed up with Amazon's lack of profitability despite it's ever growing popularity and innovative business models? Share price has taken a hit without immediate bounce back over the last week, would it be time to take a short position on it, or buy up stock for a longer term run-up?

As a customer, I absolutely;y love Amazon. As an investor, I also love the online retail trends and their interesting business models outside of retail. Do you guys think share prices will surpass $400 again this year despite this recent hit, and why? I appreciate the input, i have not followed their financials and market activity enough to make any sort of decisions yet or claim to be an expert.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 01:04 AM
Will be interesting how they change their prime membership going forward. Their prime instant video option is not as good as netflix but i feel like there is much more potential for profitability from online streaming and rental sales relative to netflix.

To answer your question, i wouldn't short this stock because of the cash flow and breadth of the business. I think amazon probably plays a significant role in many peoples lives in 10 years fwiw, Jeff Bezos is a beast.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 03:18 AM
No interest in shorting it as it's approaching oversold in the near term.

Will buy when it hits 315ish in the next couple months and hold to new highs.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 12:10 PM
My bias is to passive investing, but I still take an interest in active trading. I don't see the appeal of shorting what will probably be one of the best companies of the new century. I put GOOG, NFLX and AAPL in that same boat. Why not short Sears, Pennys or Radio Shack? Those are the companies that are in trouble.

You might get lucky and time a short correctly, for instance anyone shorting almost anything on Jan 1 is probably ahead, but I would bet against it.

I'm not a big fan of shorting things anyway, since it is really easy to get scared out of your "shorts" in a bull market.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 12:29 PM
Quote:
Originally Posted by unfrgvn
My bias is to passive investing, but I still take an interest in active trading. I don't see the appeal of shorting what will probably be one of the best companies of the new century. I put GOOG, NFLX and AAPL in that same boat. Why not short Sears, Pennys or Radio Shack? Those are the companies that are in trouble.

You might get lucky and time a short correctly, for instance anyone shorting almost anything on Jan 1 is probably ahead, but I would bet against it.

I'm not a big fan of shorting things anyway, since it is really easy to get scared out of your "shorts" in a bull market.
+1. Despite valuation, Amazon is an amazing and innovative company that customers love with some of the strongest leadership out there, and I wouldn't bet against it.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 12:51 PM
I think the thing to watch is how they're going after B&M same day merchandise sales. They're putting in dropbox lockers in metro areas, and I wouldn't be surprised to see this morph into vending machines a'la Redbox eventually. PLus Bezos is proud of their anticipatory shipping technology which would slide right into this.

Their cloud offerings ain't too shabby neither.

Quote:
Originally Posted by ChipRick
Will be interesting how they change their prime membership going forward. Their prime instant video option is not as good as netflix but i feel like there is much more potential for profitability from online streaming and rental sales relative to netflix.
Seems like most people I know (families) got Prime for the free 2-day shipping and the video is just a bonus.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 04:33 PM
Quote:
Originally Posted by JasonInDallas
Seems like most people I know (families) got Prime for the free 2-day shipping and the video is just a bonus.
Yea exactly i mean they had to find a way to both promote prime and showcase their new netflix-like option. I wouldn't have checked it out unless my fiance and I hadn't liked and purchased prime for the year.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 05:21 PM
given comments, might be a good time to take a short now, i have no knowledge of the stock though but no matter how good a company is, it is still should not go to far off fundamentals.
twitter/facebook look too expensive to me. the whole us-market is valued rather high right now though not yet in a bubble.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 07:22 PM
If you aren't sure whether you want to go long or short you should probably do neither and look for something else you actually have a strong opinion of
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 08:07 PM
given comments? so just to be contrarian? what have we said makes you bearish?
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 09:08 PM
Quote:
Originally Posted by ChipRick
what have we said makes you bearish?
That not one response mentions valuation?

The question wasn't whether Amazon is a great company, but rather if it's a good buy (or short).

No matter how great a story, there's always a price that makes any remarkable company an unremarkable buy.
Finally Time to take a Short position on Amazon? Quote
02-06-2014 , 10:46 PM
I am conflicted on this. Amazon is a great company but Bezos has made it clear publicly that he could care less about the shareholders. I would actually really love to short it since it's valuation is so high but I agree with the poster above who said that its smarter to look for a more solid short (weak company) that has all signs pointing to moving lower.

If public sentiment turns against Amazon as a stock I would feel more strongly but there are just too many options right now to focus on Amazon IMO.

I also like the idea of shorting Twitter. I think it is way over-valued and it is highly likely that some new fad in social media could sink it. Also they are not done releasing stock and this could have a huge negative influence on the price. Facebook makes too much money for me to feel comfortable betting against it.
Finally Time to take a Short position on Amazon? Quote
02-07-2014 , 01:26 AM
Saying that you want to short it is a completely different story from actually finding the right put options. One thing that you learn about options is that it is not enough to be bearish or bullish. You also have to get the timing just right.

As an investment, I'm not impressed with Amazon as a store. They have itty-bitty margins that have them teetering on the edge if they make any mistakes. And while they have a big audience now, people will just leave if they raise their margins by raising prices. People will just go to Newegg/B&H/whatever. There is no compelling reason to buy from Amazon. Eh...

As far as online streaming goes, I don't care. It's just another crappy business to be in. Are they going to fight it out with Netflix to see who can make the least profit on the most revenue? If you don't produce or own any content, you're nothing in this business. (Keep in mind that Amazon is trying to produce content/buy scripts/produce.)

I'm most interested in seeing what's next for their web services division. This is where the promise of Amazon as a business lies for me.

Anyway, for anyone saying they want to short it, provide exactly what puts you're thinking about.
Finally Time to take a Short position on Amazon? Quote
02-07-2014 , 01:39 AM
Quote:
Originally Posted by dc_publius
Anyway, for anyone saying they want to short it, provide exactly what puts you're thinking about.
You can just short sell it. No need to use options.

Their gross margins are actually decent. They just spend a crap load on cap ex.
Finally Time to take a Short position on Amazon? Quote
02-07-2014 , 05:17 AM
If market trades up a little / sideways at worse for couple months...

Will deep, otm put options be cheapish for social media, netflix, pandora etc... come the next round of earnings ? Lot of hints here and there in earnings calls so far this year about lowering guidance from stable companies.
Finally Time to take a Short position on Amazon? Quote
02-07-2014 , 06:26 AM
Quote:
Originally Posted by dshen13
That not one response mentions valuation?

The question wasn't whether Amazon is a great company, but rather if it's a good buy (or short).

No matter how great a story, there's always a price that makes any remarkable company an unremarkable buy.
^^ exactly my thoughts.
Finally Time to take a Short position on Amazon? Quote
02-11-2014 , 12:05 PM
John Hempton thinks amazon valuation is roughly fair given they should be able to quadruple sales and achieve an 8 percent pre-tax margin. to make the stock a really good buy it needs to grow sales by 600%. btw, his blog is awesome, lots of great stuff there.

http://brontecapital.blogspot.de/201...theory-of.html
Finally Time to take a Short position on Amazon? Quote
02-11-2014 , 07:53 PM
Valuation, by itself, is never a good reason to short a stock. An overvalued stock can double or triple in a short period of time. The market is filled with many examples of these.

It's better to wait for a catalyst before you short the stock. It might be growth slowing or a change in investor sentiment.

I know many people that thought amazon was overvalued when it was at $120 a share. Look at it today.
Finally Time to take a Short position on Amazon? Quote
02-11-2014 , 09:56 PM
Quote:
Originally Posted by donkeykong2
John Hempton thinks amazon valuation is roughly fair given they should be able to quadruple sales and achieve an 8 percent pre-tax margin. to make the stock a really good buy it needs to grow sales by 600%. btw, his blog is awesome, lots of great stuff there.

http://brontecapital.blogspot.de/201...theory-of.html
Notice his correct use of humorous footnotes.*

He does a great job of giving historical examples to explain his take on things and is actually enjoyable to read. Very helpful.

*I'm not sure where he got the idea from.
Finally Time to take a Short position on Amazon? Quote
02-13-2014 , 05:43 PM
There should be a similar thread about all social media stocks, all 3d printing stocks, TSLA, maybe even Google itself. (just some of the few that come to mind)

You are seeing people justifying valuations with number of users same way they did "number of eyeballs" in the late 90's

I want to hear a reasonable justification to all the valuations of the above stated companies (bar google) other than "people love their products" That means nada and furthermore doesnt mean they have a good way to monetize it (esp social media stocks)

Amazon is definitely overvalued no two ways about it but as someone stated its about timing and nothing can stop it from reaching 1000 a share same way the nasdaq reached 5000 in the year 2000 while at 2500 it was already overvalued
Finally Time to take a Short position on Amazon? Quote
02-13-2014 , 07:00 PM
You short a stock if there's evidence of fraud or management's incompetence.

You might be right shorting Amazon, Netflix, or TSLA but it's probably not a good idea to short companies that create products people love.
Finally Time to take a Short position on Amazon? Quote
02-14-2014 , 09:04 PM
FB and AMZN have similar valuations... Would you rather own Facebook or Amazon?
Finally Time to take a Short position on Amazon? Quote
02-15-2014 , 06:00 PM
Quote:
Originally Posted by Keloika
FB and AMZN have similar valuations... Would you rather own Facebook or Amazon?
This is not true is it? EPS is roughly the same but FB is 6x higher stock price. Amazon currently about 600PE, FB about 100PE.

Despite that I am not sure how I would answer your question.
Finally Time to take a Short position on Amazon? Quote
02-15-2014 , 06:06 PM
Quote:
Originally Posted by zerosum79
This is not true is it? EPS is roughly the same but FB is 6x higher stock price. Amazon currently about 600PE, FB about 100PE.

Despite that I am not sure how I would answer your question.
Sorry, replace valuation by market cap
Finally Time to take a Short position on Amazon? Quote
02-15-2014 , 06:09 PM
Quote:
Originally Posted by Keloika
Sorry, replace valuation by market cap
Actually that is startling to me. I would think that Amazon's market cap would be bigger but you are correct on this.

Still not sure what my answer to your question is.
Finally Time to take a Short position on Amazon? Quote

      
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