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Logical Thought  

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  • Amazon: Don't Fight AWS Momentum [View article]
    Here comes the latest AWS margin crunch:
    May 19, 2015. 08:59 AM | Likes Like |Link to Comment
  • Tesla Vs. Porsche - Tales Of Growth [View article]
    >>There is a limited market for a high price sedan<<...

    Agreed, especially when it has range limitations, and that's exactly why this isn't a mega-growth story. Once the initial X backlog is gone (beginning Q3 2016) they'll sell 55,000 combined S&X per year (maybe fewer) and won't be able to bring in even a slightly profitable Model 3 for less than $50,000 that in its best year might sell 120,000 (and make very little money doing so). This company will NEVER be profitable and if it keeps funding itself with debt will wind up bankrupt.
    May 19, 2015. 08:45 AM | 14 Likes Like |Link to Comment
  • Tesla Vs. Porsche - Tales Of Growth [View article]
    All those pretty lines are missing the fact that Model S sales are about to have sequentially near-flatlined for four quarters in a row (Q4 2014 through Q3 2015) and then will take a giant dive when the "X" comes out.
    May 19, 2015. 07:39 AM | 16 Likes Like |Link to Comment
  • Amazon: Don't Fight AWS Momentum [View article]
    >>just sit on the sidelines if you're not a trader.<<

    But I'm asking even if you ARE a trader, how (and why) you would have responded to the Amazon-specific examples I provided.
    May 16, 2015. 03:03 PM | 1 Like Like |Link to Comment
  • Amazon: Don't Fight AWS Momentum [View article]

    You're asking all the right questions. Here's what I do with a bubble-stock:

    1) I make sure that there's zero chance it will get bought, in this case simply because it's too big. That's 100% the case with $200 billion market-cap AMZN but unfortunately in this bubble-market, that's not necessarily the case with $2 billion ETSY. (I'm not saying that any entity that would buy ETSY wouldn't be an idiot, just that in an era when Facebook paid $19 billion for WhatsApp and Uber gets a $50 billion valuation despite burning a ton of cash, I get extra-cautious about the buy-out possibility.)

    2) I look for a catalyst of some sort, which in the case of Amazon I believe is a serious move from Wal-Mart and start-up, as well as increasing cloud services pressure from a number of big names who got a late start in the space.

    3) I control risk not with a stop-loss per se but with a position-size cap; i.e., I decide how large (percentage-wise) I'm willing to make the position in my portfolio and if it goes against me and exceeds that percentage I cover just enough to cap it and keep doing so for as long as necessary.

    I'm not advising that anyone else should do this, but it's how I handle it.
    May 16, 2015. 03:00 PM | 1 Like Like |Link to Comment
  • Amazon: Don't Fight AWS Momentum [View article]
    >> isn't logical to fight the tape.<<

    Okay, here's a non-hypothetical: last summer AMZN quickly plunged from the $350s to $305 and last fall from the $340s to the $280s. (I wasn't short yet either time.) When would you have sold under your mo-mo rationale? And when would you have bought back in? More recently it's down from the $450s to the $420s-- how do you know it isn't "game over" right now? I can see someone saying "AMZN's a bubble but it's unpredictable so I'm just not playing," but I can't see someone saying "It's a bubble but I know when to get in and out without being whipsawed."
    May 16, 2015. 01:13 PM | 1 Like Like |Link to Comment
  • Amazon: Don't Fight AWS Momentum [View article]
    >>Walmart has no infrastructure that could efficiently scale for ecommerce. I test drove Walmart's Web services. It takes weeks for shipping...<<

    You have no idea what you're talking about:

    And as for shipping, they've already been offering fast free shipping for orders over $50, and here in Manhattan they show up in one to three days. (The promised time on the site is more like five days.)

    But more importantly is PRICING on household goods. Charmin is a perfect example-- look at the per-sheet price:

    You can do that with loads of items (soap, detergent, paper towels, etc.) and Wal-Mart is a LOT cheaper on almost all of them. So if you think AMZN's earnings look bad now, wait until it's forced into a price war with Wal-Mart.
    May 16, 2015. 11:31 AM | 3 Likes Like |Link to Comment
  • The Silliness Of Tesla's 7kWh Powerwall Battery [View article]
    >>I point this out because so many people like LT like to inflate the battery cost by adding the cost of an inverter to the total cost.<<

    Hi Clayton,

    I hadn't had a chance to check the comments here for a while but as it's a quiet Saturday morning I now do. Perhaps you can explain to me why so many Teslarians appear to be functionally illiterate. Is it because they CAN'T read or simply don't want to? Here, let me help you with a direct quote from the article above:

    "Each battery costs $3000 and a rule of thumb is that the installation and inverter double that cost, implying that if installed individually each would cost around $6000, but if you're tapping into an existing solar system you won't need an inverter so we'll use an installed price of $4000 each."
    May 16, 2015. 08:05 AM | 1 Like Like |Link to Comment
  • Amazon: Don't Fight AWS Momentum [View article]
    >>Investors should ride the momentum higher, despite the continued overvaluation of the stock.<<

    a/k/a "Advice only heard during a bubble, shortly before it pops."

    On a less flippant note, is now coming hard after AMZN's core business, underpricing it significantly on almost everything and (finally) setting up a series of massive dedicated e-commerce distribution centers and-- as revealed earlier this week-- a $50/year free shipping program. And of course the tiny AWS business is under assault from several directions, as evidenced by the huge year-over-year drop in operating margin (which is a fake number anyway as it excludes stock-comp and doesn't reveal how much Amazon itself-- its biggest customer-- is paying internally to juice up the numbers).

    I'm short and got shorter last week.
    May 16, 2015. 07:23 AM | 4 Likes Like |Link to Comment
  • 2 Incremental Positives For Tesla In California [View article]
    Read the disclosure, Teslarians: "The author is short Tesla." Thus, please be careful regarding what his hidden agenda may be in writing about these supposed single-state short-term incremental positives, and don't necessarily believe whatever he tells you!
    May 15, 2015. 11:29 AM | 16 Likes Like |Link to Comment
  • You Reckon Yourself A Genius In The Present Market? [View article]
    At some point we'll be hearing: "No one could have seen it coming. Not even a genius!"
    May 14, 2015. 03:45 PM | 15 Likes Like |Link to Comment
  • Potential Deja Vu With Yellen's 'Irrational Exuberance' Moment [View article]
    Wow this is well-written, and it takes a very reasonable mid-point in the "love/abolish the Fed" debate.

    P.S. Bernanke was as bad as Greenspan, keeping money free for as long as he did despite a non-crisis economic situation, and so far Yellen is equally bad. Money should NEVER be "free", and in fact in real terms the Fed is currently PAYING people to take it by setting real short-term rates @ -175bp. When you pay people to use ANYTHING it gets deployed in really stupid ways, and money is no exception (in this case by bidding up a world full of asset bubbles).
    May 14, 2015. 10:09 AM | 2 Likes Like |Link to Comment
  • Wal-Mart details its Amazon Prime rival: $50/year unlimited shipping [View news story] is getting very serious about e-commerce:
    May 13, 2015. 08:56 PM | 1 Like Like |Link to Comment
  • Wal-Mart details its Amazon Prime rival: $50/year unlimited shipping [View news story]
    I've now switched 99% of my household goods shopping from Amazon to and last time I checked I was still walking upright. The fact is that is cheaper than Amazon-- often drastically so-- on almost everything, and even before this new deal was offering fast free shipping on all orders over $50, and at least here in Manhattan most of the stuff would come within a day or two.

    I've been waiting years for to get serious (and for me to short Amazon) and now because it has, I have.
    May 13, 2015. 08:55 PM | 2 Likes Like |Link to Comment
  • Turns Out A Tesla Supercharger Costs 2 Or 3 Times What Elon Musk Said [View article]
    >>And it would have been $164 million better with realized lease accounting and $20 million better without subtracting Elon's stock-based compensation.<<

    You're confusing the GAAP loss with cash flow. And re. stock-comp (back to GAAP now), if you think free shares of stock shouldn't count as an expense then maybe everyone should be paid 100% in stock and then revenue could almost equal "profits". (If you do subscribe to that particular philosophy, perhaps you can grab the CFO job at Tesla as soon as Deepak finishes dumping: )
    May 13, 2015. 12:04 PM | 4 Likes Like |Link to Comment