Alexa Suggests No Definite Correlation Between Amazon Traffic and Sales

In an attempt to find a reason to short Amazon (NASDAQ:AMZN) due to it trading with such a high PE, an investigation was pursued to compare Internet traffic to net sales. Alexa Internet traffic data shows Amazon.com at a 5 year low. The data shows Amazon’s traffic has been down all year, about 40% from the peak ending in 2005.

Using data from Amazon’s press releases, the quarterly net sales are plotted below along with trend-line extrapolations for Q2 and Q4. The average quarterly sales are also plotted for each year. These average quarterly sales were, just for fun, used to take the second derivative of net sales to show that Amazon.com is about to have record breaking sales acceleration over the last 5 years. The results conclude that internet traffic data and net sales do not have a causal relationship, nor even any form of correlation. Further due diligence would be necessary to find a reason to form a bearish consensus for AMZN.

Disclosure: No Position in AMZN