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Same as it ever was: Shares of Amazon (AMZN) trim their AH loss and are now only down 1%....

Same as it ever was: Shares of Amazon (AMZN) trim their AH loss and are now only down 1%. Though the company, already well-known for its razor-thin profit margins, showed an operating loss the glass is still half full for plenty of investors. While some analysts worry about spiraling costs - the bull camp still sees the Bezos-led spending on fulfillment centers, global growth, digital content, grocery initiatives, web services, etc. as paying off brilliantly in the future.
Comments (25)
  • we'll see. i think Ford and GM are the answer here as they can produce commercial all electric vehicles thus taking to zero the distribution cost. again it will be interesting to see how they do organize their logistics. they're obviously "in home" which means competing directly with the postal service. is a privatization of the USPS in the offing?
    25 Jul 2013, 04:56 PM Reply Like
  • Because electricity is free and delivery people will also work for free..
    25 Jul 2013, 05:20 PM Reply Like
  • OMG margins will be greater than revenues!
    25 Jul 2013, 06:22 PM Reply Like
  • What was your last projection for this quarter, Paulo. Wasn't their expectation 18 cents and you cut it to 8 or 9 cents, expecting it to follow the previous trend and EPS?
    25 Jul 2013, 08:20 PM Reply Like
  • My last was $0.07-$0.08. But AMZN has been driving estimates down and down again for 11 or so quarters already, this Q was supposed to be $1.01 back in late 2011, if I'm not mistaken ... ended up being -$0.02. The stock has been going up on vapor for years now.
    25 Jul 2013, 08:26 PM Reply Like
  • Ok, I get the joke. People who are religious wackos about Amazon will not see this as the disaster requiring the stock to be jettisoned. I get it. People who like this sort of thinking will still find a way to find this to be the sort of thing that is to their liking.

     

    But please tell me that people aren't going to actuallly LIKE this quarter.

     

    In April, the last dismal earnings release, the company at least was able to beat the newly reduced earnings. Now they can't even hit their own reset low bar anymore? They can't even get a 10 from the East German judge? They can't even win at the game when they get to change the rules in the middle of the game?

     

    I don't put a lot of stock in the after hours trading. I don't believe in a lot of Wall Street conspiracy theories, but we have seen that large investors in Amazon do indeed try to defend the stock in the aftermarket on the day of earnings, because they know the signalling on a concept stock is important. Much harder to do when the market actually trades with full volumes. Recall that Amazon did ok in the aftermarket last quarter, and then fell 20 points on the full day of trading.

     

    Memo to hot money: Hello guys, Amazon missed and guided down again. Did you notice this? Go take a look at Facebook. It has momentum. Remember momentum?
    26 Jul 2013, 12:47 AM Reply Like
  • The thing with AMZN is that they convinced institutions to buy a model, not AMZN but a model of AMZN. Now everything is geared towards keeping that model alive in spite of the 11 miss/guide downs in a row.

     

    The model is based on the "we are investing in the future" mantra which is basically a lie. It's based on AMZN having the profits, the margins, in the future - but not now. Not ever now.
    26 Jul 2013, 07:59 AM Reply Like
  • They have their model, you have yours. When a model doesn't correspond with market reality, which is wrong, reality or the model? How long does a model have to not match reality before it is considered wrong? If it's reality that's wrong somehow, how can that be? If you're claiming fraud, what's the fraud? It's in plain sight that they're not profitable and are unlikely to be very profitable any time soon.
    26 Jul 2013, 12:06 PM Reply Like
  • When models fail for 3 years, the models must be wrong.
    26 Jul 2013, 12:19 PM Reply Like
  • Somehow I think you're missing my point.
    26 Jul 2013, 12:20 PM Reply Like
  • Well, the models are on the company's fundamentals, not on the share price. My models have been right, not wrong, as amazing as that might sound. The models that have been wrong are the Street's, not that it matters.
    26 Jul 2013, 12:35 PM Reply Like
  • Oh. All this time I have thought you were saying your models indicated that the market has been overvaluing the stock.
    26 Jul 2013, 04:31 PM Reply Like
  • NW the models are to predict the evolution of AMZN's fundamentals (and you know it).
    26 Jul 2013, 04:33 PM Reply Like
  • The fraud lies within the propping of the stock price. I believe that there is some "funny" business going on in the trading of this stock. Low float, easy to squeeze, 100 share trades back and forth by computers whose orders never fill but there are thousands of 100 share buys on the bid so the stock never falls even though the orders never fill. It's a perpetual prop, and the big money comes when investors short the stock and then the computer programs put a new squeeze on and steal the shorts money. I don't believe this will ever end until some of the larger money decides to dump this pos and the rest follow suit.
    28 Jul 2013, 01:08 AM Reply Like
  • What is the difference between a profit of 0.07$ and a loss of 0.03$ ? Answer = A couple of millions, for a 140B growth stock
    26 Jul 2013, 07:15 AM Reply Like
  • "Profit" is so last century.
    26 Jul 2013, 07:39 AM Reply Like
  • As if profit of 0.07 would be good? The future profit mantra is BS. You are right in that there is only a small diff between 0.07 and negative 0.02. I would say that that should decrease fair value of stock from maybe 60 to high 50s.
    26 Jul 2013, 09:16 AM Reply Like
  • Yesterday's quote of the day goes to an analyst on CNBC that said that AMZN was at a reasonable price being at 60 times 2015 earnings.

     

    No reason to worry about AMZN until 2015 comes around. Though when 2015 rolls around they might be saying .... Sure they reported a loss, but look at what's projected for 2017 earnings. A mere 85 times projected earnings.
    26 Jul 2013, 07:46 AM Reply Like
  • Exactly. We're now 3 years into this fantasy.
    26 Jul 2013, 08:00 AM Reply Like
  • The closest anyone on CNBC came to even being skeptical about AMZN was one analyst who said he thought GOOG was a better buy. .... I'm being generous in suggesting that is "skepticism".

     

    I'll bet AMZN is a case study at MBA schools right now. Teaching them how to duplicate the scam.
    26 Jul 2013, 08:40 AM Reply Like
  • It might be true that AMZN is a scam, but betting against it requires more than just patience.
    26 Jul 2013, 10:01 AM Reply Like
  • I think its time to acknowledge that this is not the time for this trade. I sold august out of the money naked calls yesterday because there was enough premium to justify it even if the stock ran up a little more today, and indeed I am now covering at a very small profit. Very lucky, because I now see that if Amazon had merely met the low bar, I would have gotten killed.

     

    I find this to be a (thankfullly) free lesson. I think its time to get out of the way. Unlike the April quarter and even the December quarter, where the stock did react to disappointment, the owners of this now are solely focused on the long term dream. Amazon has gotten the estimates down, and the stories it is now peddling have no near term metrics to be disproven. There is no news in the next 3 months that will enable anyone to say that AWS isn't a good business model (even though it isn't), or groceries aren't working.

     

    They have succeeded in undergoing the transition to a concept stock. Even a disaster in Channel Advisor numbers will not be enough.

     

    Historically Amazon has been a seasonal stock. Growth investors want to own it into the 4the quarter. So even if September is very bad, investors likely won't dump it into the 4th quarter.

     

    And if you look at available growth stories to play in for the momentum funds, the mobile handset trade is now no longer a growth trade. You can like Apple or Samsung or neither, but they aren't growth vehicles anymore, just value stories.

     

    Thats a lot of market cap to replace with other pipe dreams.
    So whats left. Electric cars, biotech stories, cloud software and E Commerce. The theme that ecommerce is a long term growth market is tarnished in my view. Personally it is plain to me that the traditional is retailer recapturing share, and the market is well on its way to becoming a profits blood bath. Everyone will now give away profit to hold share. They will take actions that hurt their profits in bricks and mortar stores to hold the customer. Its like airlines, before the recent improvement in that industry.

     

    Thats the recipe for a long term terrible business model for all of the players, all of them. But nothing is going to disprove the hypothesis in the near term that ecommerce is an attractive growth market. The growth funds really really need this to be an investible theme, and that pressure creates perception, even for very smart investors.

     

    I suppose the Alibaba IPO will shine a light on the flaws in the Amazon model, and show that it has made major misteps which will be impossible to remedy in Asia.I also think they are going to do a big financing, and that will introduce capital markets short selling around a convert, which could create a technical opportunity.

     

    But this isn't enough to justify the risk return right now.

     

    I continue to think the pure best value in the market today anywhere is the short side of Amazon. But I am now persuaded that the risk return is out of whack for the next 6 months. I will short it again on the 4 th quarter, assuming it hasn't corrected. It would be sad to miss it, but thats life.

     

    I think this company and the capital markets dynamics are a really bad thing for our country. Long term, this is not a positive for even the consumer. Growing up we were taught that gimmicks don't work. But Amazon and QE may be to disproving this for the time being.

     

    I have grudginly concluded there are better places to play right now than the short side of Amazon. Being long Amazon is not one of them either, obviously. Too much risk on either side.
    26 Jul 2013, 12:41 PM Reply Like
  • Well said, Tippydog. After the FB nonsense, I covered my naked calls pre-earnings (at a profit) too. The grocery announcement today is a meme and a clue to 1999. AMZN bought WBVN, and is now embarking on a money-losing "make it up on volume" grocery delivery service.
    26 Jul 2013, 01:43 PM Reply Like
  • Same as it ever was and just another day when AMZN stock goes down AH after its earnings report and then goes up the next day.
    26 Jul 2013, 04:40 PM Reply Like
  • FYI: http://bit.ly/17JEbY6
    Jeff Bezos' plan for world domination: Lose money
    Jeff Bezos, CEO of AMAZON, at a press conference on September 06, 2012.
    by Shannon Mullen
    Marketplace for 7/26/13, BP's frenemies
    26 Jul 2013, 10:08 PM Reply Like
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