There's something which is odd about Amazon.com (NASDAQ:AMZN). I am not talking about the way it lost all its earnings and still it gets analyst support and massive price targets. Or how it's so patently false that investment can account for the destruction of earnings witnessed, much less over a 4-year timeframe.
What is really odd is how analysts seem to conscientiously ignore some facts and events regarding the company. I mean, analysts go to great lengths to see promise in things like Amazon Fresh, which likely runs at a substantial loss and that's why it isn't expanded faster. Analysts lap up the thesis that Amazon.com can sell devices at cost and make money on the content later, in spite of the fact that "later" has already arrived for the original Kindle Fire and yet no added profits were seen. Analysts also easily projected unit sales in the millions for the tremendously expensive phone Amazon.com launched, leading to a couple of days' pop which added 10% or so to the stock.
And yet, here we are. We now have proof that the Fire Phone is not selling. It's not even in the top 100 sellers in electronics and gets outsold by such esoteric stuff as the original Kindle Fire which Amazon.com no longer sells. This tells us strongly that the Fire Phone can't be selling more than 100-200k units/year, or less than 1/10th of what was expected. And where are the analysts analyzing this fact? Nowhere to be seen!
Remember, these same analysts had no qualms in predicting a fanciful future for Amazon Fresh, which were highly speculative predictions used to justify higher price targets. And yet, facing what are solid facts, we hear little or nothing from the analyst community?
Something seems awfully wrong. It seems this entire community is devoted to promote the stock like it were a dubious penny stock. Perhaps it has to do with an incoming debt offering that's not yet been announced and will carry juicy commissions, but the whole thing reeks. If the analyst community covering Amazon.com were anything near neutral, its attitude towards the stock would forcibly be very different.
I won't even say how unrealistic it is to predict, back in 2010, that Amazon.com would be making more than $10 per share in profits come 2014, and instead be faced with losses and still award it with price targets hundreds of percent above where they stood in 2010. But these "little" things add up, and really remove one's faith in the honesty of the analyst community. Sure, in the grand scheme of things the Fire Phone might well be irrelevant for Amazon.com. But why then celebrate it when announced, and then remain silent when it so obviously flops?
I don't know, it just doesn't seem very honest.
Disclosure: The author is short AMZN.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.