Kindle News Could Push Amazon.Com Down

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 |  About: Amazon.com, Inc. (AMZN), Includes: MSFT
by: Dana Blankenhorn

The big question investors have been asking all summer is, when will Amazon.Com (NASDAQ:AMZN) fall off its perch and give us a buying opportunity?

Cris Frangold, who is a Seeking Alpha whiz with basic materials and commodities, took a crack at this question yesterday and found that Amazon's actual digital sales figures remain a tantalizing mystery.

There may be something to the idea that investors just want to be tantalized. Amazon's release that it has now moved a total of 100 million books through its Kindle Library was just such a tease. It doesn't say how many were free, and 180,000 are available at that price for people who pay $79/year for Amazon's "Prime" membership package, which by the way now represents more shipments than its earlier "free shipping" option.

It's the ability to manipulate the hype cycle with these kinds of press releases that keeps Amazon headed higher, as The Motley Fool suggests.

All of which tells me that news, not rumor, is Amazon's big fear.

News will be made by AMZN on September 6. That's the date Amazon has scheduled for announcing the Kindle Fire 2. In preparation some Kindle items are currently out of stock. The rumor mill is churning with reports of a bigger Kindle, a Kindle phone, a new backlit Kindle reader, even a free cellular data plan.

Some of that will happen. Some of that will not. The Kindle press conference will happen very shortly before the launch of Microsoft (NASDAQ:MSFT) Windows 8, which will compete with it for attention.

If Amazon shares are going to go on sale, they will go on sale in the weeks between the press conference and the actual start of new Kindle deliveries. Any price 10% below current levels will be considered a bargain by Amazon bulls, so expect $220/share to be held. After that your best shot at cheaper shares will come with the release of third quarter earnings in October, but remember that while July's numbers were considered a "miss" in some quarters, the stock still powered ahead after they came out.

Just remember that I'll be looking for that bargain with you. I bought Amazon at about $170 at the start of the year and sold at $230 a month or so ago. I'd like to find a place to get back in myself.

Disclosure: I am long MSFT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.