southbeach

Short Amazon: Risky Investment at Current Price

interesting perspective, and I somewhat share your skepticism about the sustainability of Amazon's current share price. conceptually though, there are some factors to consider which I don't think you've adequately addressed:

1. e-commerce market size is growing, and will continue to grow - hence it's not a zero sum game for leading ecommerce players - so if Amazon grows with the ecomm market, they could still grow earnings nicely
2. share of ecommerce wallet - Amazon is again well positioned to benefit disproportionately from their superior proven ability to execute and delight customers - launching new categories, and growing strongly in non $ denominated countries (e.g. € zone, Yen) which provides a strong lift to dollar denominated earnings, and taking more than ecomm market growth rate in overall share
3. leverage - Amazon and Walmart will be the players most likely to be able to leverage their scale to really crank the revenue handle - and generate strong bottom line growth, even on compressed margins.
4. International growth - see above - the weaker the dollar gets, the more international sales in stronger currencies boost earnings
5. Innovation - Amazon is pushing into some interesting areas (cloud, payments) which could further boost their reach and customer base. 'Owning' the consumer's transaction info - that crucial billing relationship, really aligns with the audience growth objectives of the core business.
6. Strong management - there are some very good long serving executives at Amazon who know the game very well, and this stability allows the company to continue their track record of above average execution.

So, I'm not joining your short trade just yet (there's a good chance of getting run over by the sentiment train right now), but I may do so once the post earnings party euphoria starts to fade.

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very interesting. thanks for the reporting and insights.