Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
JonathanWagner,
Their EPS dropped to .01 a share for the latest quarter, so analysts are assuming earnings will rise to 1.77 for 2013. Its not out of the realm of possibility, but I can't be sure what will happen. As I point out in the article, there isn't any reason for us to assume it WILL happen. I simply went with analyst estimates for growth to avoid having to delve into making my own estimate call and justifying it. Scope is an issue with articles like this, and any argument I presented would probably be weak anyways.
Thank you for reading and taking the time to comment.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
msapp,
Your comments are very kind. I am an amateur; I don't work in the industry, although I've been investing and trading for a few years now. I started in 2000. My profession is completely unconnected to finance, although I've found many transferable skills.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Mark,
So don't argue with the market. This isn't an article arguing you should short the stock, simply that you should not invest your money in something you can't find value in.
There were many people who recognized houses were overpriced in 2005 and 2006. And many people purchased houses anyways. Many of them are wondering why they didn't "argue" with the market now.
Thank you for taking the time to read and comment.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
bartenis,
Thank you for your constructive criticism. I will look into your accounting recommendations IRT working capital alterations and share dillution. However, I disagree with you on horizon discount rate. It happens to be year 7 into perpetuity that is discounted at 3%. I chose 3% based roughly on economic growth rates. I cannot forecast what will happen to the company's growth prospects after the next couple of years, and I'm not going to speculate on it. 3% may be conservative, but I'm ok with that... especially since I feel these growth rates over the next few years are NOT conservative. May I ask why 6%? If we expect growth rates over 36% in the next few years, why not 7, 8, 9, or even 50% afterwards?
Anyways, thank you for your inputs. I will look over them and consider applying them in future analysis.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
BTW, I haven't noticed anyone mention it, but it is also troublesome, to me at least, that Amazon is repurchasing shares at these prices, and financing activities with debt.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
M1424420,
Congratulations on choosing accounting as a degree. Amazon could be an interesting case study for you as you learn accounting principles. I humbly disagree with you that because Amazon is not going anywhere you shouldn't care about their creative accounting. Should you be in the position to want to invest $25,000+ into one stock in the future, you will be highly concerned about a potential 50% drop. And there are too many places to put your money to risk such a drop where it seems almost imminent. Thank you for taking the time to comment. I look forward to your insights in the future as you continue your education.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
tsugarla,
I haven't looked at EBAY for a while, but I'll try to take a look tomorrow. Probably just an off the cusp look, since I have other things occupying my mind. I'd love to see some of your thoughts on it though. I am not sure that Ebay and Amazon have the same market, to be honest. Amazon has a share of Ebay's market (resale and sale of some objects by third parties), but Ebay doesn't have a share of all of Amazon's business. It might not make Amazon a smarter investment right now, but it probably makes it a more stable business
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
215304,
Thank you! I'm glad you found the article useful. It was very instructive to run through the analysis and know I had to avoid cutting corners, since the I would be opening the doors to criticism by posting my work.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
I'll have to calculate it. For expedience, I used numbers provided by Google and Finviz. I have excel spreadsheets that pull data, and I should build a ratio generator, but my spreadsheet has issues as well. It pulls dumbed down financial statements, and for any real analysis, I have to go out and find numbers to alter it. That eats up a lot of time, and I end up taking shortcuts.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Michael,
I also meant to comment on your put strategy. In some ways, your bet is a much better trade than mine. The diagonal spread I have open on Amazon will not benefit from a sudden and severe drop in share price. So, I am not purely short on Amazon. In a few cases, this has been a source of frustration for me (FB, VXX), but in this particular case, AMZN has been trading sideways since I opened the position (with some drifts upwards). I would have been hurting with a pure short position, but I'm doing ok with the diagonal. I guess you take the good with the bad.
In regards to Paulo, I have read his articles, and they are probably what inspired me to look at amazon in the first place. He is definitely short Amazon, so I've tried to avoid his articles for a while, and focus on counter arguments to my thesis. He's a great contributor to the community though.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
214, I'm happy for your success. Unfortunately, I lack the ability to time price rises or falls with any fidelity. I've tried to experiment with technical analysis, and read many books. But all results I've ever tracked have been equivilant with chance.
I find I do better with finding value purchases and sticking with them, with some option trading on the side.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Michael,
Thank you for the reply and comment on analysts estimates. I have to wonder whether some of the ambiguities I found in the annual report make it difficult analysts to forecast earnings. As I pointed out, I am not a professional analyst, so I did not want to get accusatory regarding what I saw as aggressive accounting. In the investing reports I read through, I didn't see any of the analysts discussing any of these issues though. One could enterpret that as a professional viewpoint that there is no concern here. But I would still love to hear why concensuses vary so much.
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Their EPS dropped to .01 a share for the latest quarter, so analysts are assuming earnings will rise to 1.77 for 2013. Its not out of the realm of possibility, but I can't be sure what will happen. As I point out in the article, there isn't any reason for us to assume it WILL happen. I simply went with analyst estimates for growth to avoid having to delve into making my own estimate call and justifying it. Scope is an issue with articles like this, and any argument I presented would probably be weak anyways.
Thank you for reading and taking the time to comment.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Your comments are very kind. I am an amateur; I don't work in the industry, although I've been investing and trading for a few years now. I started in 2000. My profession is completely unconnected to finance, although I've found many transferable skills.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
It seems we are all in violent agreement.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
So don't argue with the market. This isn't an article arguing you should short the stock, simply that you should not invest your money in something you can't find value in.
There were many people who recognized houses were overpriced in 2005 and 2006. And many people purchased houses anyways. Many of them are wondering why they didn't "argue" with the market now.
Thank you for taking the time to read and comment.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Thank you for your constructive criticism. I will look into your accounting recommendations IRT working capital alterations and share dillution. However, I disagree with you on horizon discount rate. It happens to be year 7 into perpetuity that is discounted at 3%. I chose 3% based roughly on economic growth rates. I cannot forecast what will happen to the company's growth prospects after the next couple of years, and I'm not going to speculate on it. 3% may be conservative, but I'm ok with that... especially since I feel these growth rates over the next few years are NOT conservative.
May I ask why 6%? If we expect growth rates over 36% in the next few years, why not 7, 8, 9, or even 50% afterwards?
Anyways, thank you for your inputs. I will look over them and consider applying them in future analysis.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
I haven't noticed anyone mention it, but it is also troublesome, to me at least, that Amazon is repurchasing shares at these prices, and financing activities with debt.
V/R
TR
Star Wars Unlikely To Top Past Performance Under New Owner [View article]
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Congratulations on choosing accounting as a degree. Amazon could be an interesting case study for you as you learn accounting principles.
I humbly disagree with you that because Amazon is not going anywhere you shouldn't care about their creative accounting. Should you be in the position to want to invest $25,000+ into one stock in the future, you will be highly concerned about a potential 50% drop. And there are too many places to put your money to risk such a drop where it seems almost imminent. Thank you for taking the time to comment. I look forward to your insights in the future as you continue your education.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
I haven't looked at EBAY for a while, but I'll try to take a look tomorrow. Probably just an off the cusp look, since I have other things occupying my mind. I'd love to see some of your thoughts on it though.
I am not sure that Ebay and Amazon have the same market, to be honest. Amazon has a share of Ebay's market (resale and sale of some objects by third parties), but Ebay doesn't have a share of all of Amazon's business. It might not make Amazon a smarter investment right now, but it probably makes it a more stable business
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Thank you! I'm glad you found the article useful. It was very instructive to run through the analysis and know I had to avoid cutting corners, since the I would be opening the doors to criticism by posting my work.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
I also meant to comment on your put strategy. In some ways, your bet is a much better trade than mine. The diagonal spread I have open on Amazon will not benefit from a sudden and severe drop in share price. So, I am not purely short on Amazon. In a few cases, this has been a source of frustration for me (FB, VXX), but in this particular case, AMZN has been trading sideways since I opened the position (with some drifts upwards). I would have been hurting with a pure short position, but I'm doing ok with the diagonal. I guess you take the good with the bad.
In regards to Paulo, I have read his articles, and they are probably what inspired me to look at amazon in the first place. He is definitely short Amazon, so I've tried to avoid his articles for a while, and focus on counter arguments to my thesis. He's a great contributor to the community though.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
I'm sure the next few years will bring your wish to fruition.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
I'm happy for your success. Unfortunately, I lack the ability to time price rises or falls with any fidelity. I've tried to experiment with technical analysis, and read many books. But all results I've ever tracked have been equivilant with chance.
I find I do better with finding value purchases and sticking with them, with some option trading on the side.
V/R
TR
Amazon Already Has Optimism Priced In, It's Fundamentally Overpriced [View article]
Thank you for the reply and comment on analysts estimates. I have to wonder whether some of the ambiguities I found in the annual report make it difficult analysts to forecast earnings. As I pointed out, I am not a professional analyst, so I did not want to get accusatory regarding what I saw as aggressive accounting. In the investing reports I read through, I didn't see any of the analysts discussing any of these issues though. One could enterpret that as a professional viewpoint that there is no concern here. But I would still love to hear why concensuses vary so much.
V/R
TR