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Amazon.com (NASDAQ:AMZN), once part of the fab four of internet, has since become a fallen angel. With profit margins shrinking to 3.25% and quarterly year-over-year earnings down 57%, the stock is over 40% off its 52-week high.

With its most recent earnings, Amazon stock dropped heavily and has bounced some 13% in the last couple of weeks. I would take this opportunity to sell this stock. Here's why:

Amazon is trading at a multiple of over 40. With revenues increasing at 20%, and negative earnings growth, that is a premium multiple, even for an internet company.

While Amazon is an internet company, it is really a retailer when it comes down to it. In other words, it should be treated like Sears (NASDAQ:SHLD), Walmart (NYSE:WMT) and Target (NYSE:TGT) of the world. Those guys sport multiples closer to 20.

Barnes and Noble (NYSE:BKS) released earnings today and they were good. This is one company that has always considered Amazon a competitor. If we are to believe that, then either BKS is worth a lot more, or Amazon is worth a lot less. I believe its the latter.

With management looking tired and distracted, earnings lacking lustre and shrinking margins, Amazon is in fact a good play on the short side. I believe the stock is headed to the low 20's and the recent bounce is simply what a friend of mine would call "a dead cat".

AMZN 1-yr chart:

Source: Amazon's Short Future