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Even after its huge day - trading at 56 times its estimated earnings - is Amazon.com (AMZN...

Even after its huge day - trading at 56 times its estimated earnings - is Amazon.com (AMZN +26.8%) still cheap at $118.49? The median price target for Wall Street analysts is $125, and FBR and Benchmark say $130 and $143 respectively.
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Comments (6)
  • Duude
    , contributor
    Comments (3376) | Send Message
     
    I wonder what one more call from politicians to apply a sales tax to Internet sales would do to Amazon? Doesn't matter if nothing is done, its always the talk that scares market participants. I figure California legislators will bring it up again real soon.
    23 Oct 2009, 05:33 PM Reply Like
  • RK
    , contributor
    Comments (400) | Send Message
     
    Amazon is doing close to 50% of its business overseas in the last quarter. I am expecting the percentage to go up more in future quarters given the dollar weakness. I also assume Amazon is charging VAT already in other countries such as in Europe and in Canada. Charging sales tax for US customers will be a bump on the road for Amazon. It is not a reason to bail out of Amazon.
    23 Oct 2009, 06:04 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2230) | Send Message
     
    Amazon is a great success and a great company, but.......

     

    It was less than 3 weeks ago when Alcoa came out with a great report and the market went nuts with euphoria as the media arm of the FED went to work and hyped the hell out of it in an effort to spark another mega rally. The mega rally fizzled and I urge you to take a look at the daily chart of Alcoa today. It was all a smoke and mirrors phantom designed to "pump up the volume".

     

    Have you ever seen an island reversal? They're spectacular and very impressive. There's a chance (I'm not necessarily calling for this to happen), an outside chance that the amazing gap up for Amazon could be left behind as an island. If that happens this coming week, it would be a major, major top for Amazon, and a nasty signal for the overall market.

     

    There are some indications out there that it could happen. The dollar strengthened impressively (finally) on Friday, Oct. 23 and with sentiment at 96% bearish, it's not only possible, but probable that the dollar is setting up for the surprise of all October surprises. The earnings "surprises" were bunk. This surprise would be real and the impact on the markets would be very, very nasty.
    23 Oct 2009, 09:58 PM Reply Like
  • Swashbuckler
    , contributor
    Comments (715) | Send Message
     
    Albertarocks---I don't ever remember the USD getting trashed as thoroughly as I've seen and heard recently. While it will likely meet an unpleasant demise in the next several years, I believe it's short term fate is much less certain. Like you, I also believe a substantial rally is more likely than not, although I do not get involved in technical analysis anywhere near the extent that you do. My gut feel is that most people who are going to dump have already gotten out. Of course, any unforeseen catalyst (war, presidential crisis, etc.) would mean all bets off.
    23 Oct 2009, 10:17 PM Reply Like
  • tripleblack
    , contributor
    Comments (13507) | Send Message
     
    Amazon got a lot of jazz from their new Kindle. I suspect the follow-on products from competitors (not to mention all the tech companies that one would expect to go for that market) are likely to clip Kindle's wings pretty quickly. Nook may be just the first volley. Without Kindle, would Amazon's star have shone nearly so bright? Without what I believe will be a very brief period as a monopoly player selling a hot product just before Christmas...

     

    Will Amazon sustain the high?

     

    I consider Amazon at 56x earnings a very risky investment, period.
    23 Oct 2009, 11:20 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2230) | Send Message
     
    On Oct 23 11:20 PM tripleblack wrote:

     

    > Amazon got a lot of jazz from their new Kindle. I suspect the follow-on
    > products from competitors (not to mention all the tech companies
    > that one would expect to go for that market) are likely to clip Kindle's
    > wings pretty quickly. Nook may be just the first volley. Without
    > Kindle, would Amazon's star have shone nearly so bright? Without
    > what I believe will be a very brief period as a monopoly player selling
    > a hot product just before Christmas...
    >
    > Will Amazon sustain the high?
    >
    > I consider Amazon at 56x earnings a very risky investment, period.<

     

    Great point tripleblack. I happen to agree with you. Here's a neat exercise. Remember 3 weeks ago when Alcoa came out with great numbers and the pump jockeys went nuts with it. In my view, they were trying to spark off another dazzling rally with all that nonsense. Keeping in mind that Alcoa is a member of the Dow 30, I wouldn't trust their numbers anyway. That's what the Dow is for... for manipulating and propoganda. I mean, if a stock gets weak, they just throw it out and replace it with something else.

     

    Take a look at the daily chart of Alcoa and notice what happened to that great "blast off". The same thing could happen to Amazon and I'll bet my dog's left nut that it does. With a strong day for the dollar, and a chart pattern that suggests the dollar's about to bust out (up), the table's all set for a major surprise next week. It's possible, and I'm not suggesting this IS going to happen, but it's possible that we're going to see an island reversal on Amazon. That, if it happened, would be a climax top of incredible proportions. It wouldn't be anything good for the markets. Take a look at both AA and Amazon (daily charts) and see if you can see what I'm seeing.
    23 Oct 2009, 11:59 PM Reply Like
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