Amazon (AMZN) has moved up a lot and I am expecting it to continue to move up through the quarter. A lot of that success will have to do with the sales of the new Kindle Fire. So if you are interested in Amazon as an investment now may be the time to look at it closely.
Jakob Nielsen's Thoughts on the New Kindle Fire
Jakob Nielsen chimes in on the new Kindle now that it has been out for a bit. The Nielsen Norman Group is a consulting firm in - where else - Silicon Valley. He was not a fan of the original Kindle Fire and even publically spoke out against it as "disappointingly poor." He was a terrible critic of the web browser experience it gave to owners. With the next generation of Kindles out, his present reviews appear to sing a different tune.
He likes the email reader and said it was very simple to set up and rated it better than the iPad email reader. The glare when one turned off the Kindle used to be "mirror like" but since then, has become very toned down on the newer model. Overall, its general user ability factors are better. This includes web browsing, user applications, watching movies ... etc. Hardware also seems better, pixel display is denser and texts are easier to read.
It's his opinion that the smaller 7" version is better than the iPad mini. With this being said, the general public's view of the new version is not faring any better than the original. Online opinions (on Amazon) of the new Fire are about 10% one star and the majority tends to be three stars just like the original. So I guess the success of the Kindle is still out and we will have to wait for sales figures.
Early figures look promising. Kindle tablets and e-readers have more than doubled over the key weekend launching the holiday season and "cyber Monday" was the biggest online sales for the Kindle ever. With that being said, Amazon is also selling in new international markets that were not open last year. One survey predicted global sales of tablet computers are expected to surge to 126.6 million in 2012. The Kindle has captured 22% of the U.S. market for tablet computers.
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Passing thoughts on Growth And Value
If Amazon has one concept that it does well it is growing revenue. From 2007 to the present, the company has almost quadrupled its revenue. This is a stock that will just not stop growing. It has explored streaming video and may eventually outright challenge Netflix. Projections have the company growing 34% in the next 5 years. Revenue has been good, earnings a bit inconsistent but the stock has consistently grown. So what should an investor do?
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Technically Speaking
It appears in early December that Amazon peaked and has now begun a pullback after an amazing move up. It is very interesting to note that the steep move up in November did not result in an over bought position before it peaked, according to the RSI indicator. So it can still move up if it chooses to do so. The strong drop yesterday may confirm the retraction taking place now. Even the MAs in the MACD are starting a down turn. As the stock moves to the middle of the Bollinger bands, I would expect volatility to decrease and I am interested to see if the 50 day MA can define a support level now.
I believe if one is looking for a good time to invest in Amazon, the holidays may be the time to do it with the sales of the new Kindles, Amazon could continue to see good revenue reports after the holidays when fourth quarter sales figures come out. Because of the nature of the company, earnings will continue to fluctuate. I would not expect an income investor to be interested in AMZN as an income source. Earnings are just too inconsistent. But if revenues continue to increase, it could give a jolt to the stock price since shrinking revenue throughout the market has been a problem this third quarter.
Amazon has moved up a lot and I am expecting it to continue to move up through the quarter. A lot of that success will have to do with the sales of the new Kindle Fire. So if you are interested in Amazon as an investment now may be the time to look at it closely.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
