Saturday 26 January 2013

AMZN - rallying on thin air

Amazon (AMZN) closed Friday +3.8% @ $283.99. This is a new historic high for AMZN, and it is now right up against double trend/channel resistance. A near term 'minor collapse' - if disappointing earnings, to the low $260s is very viable.


AMZN, daily


Summary

Unlike AAPL which still makes a truck load of money (PE of 8, $60 a share)..AMZN is failing to make even moderate profit, and its net margins are now a mere fraction of 1%.

On any basis the stock is still enveloped in a cloak of delusion, inspired by the clown finance media of course, but also by those who somehow think a profit margin of <1% is somehow 'acceptable'.


Crazy price-earnings ratios

The trailing PE is now in the mid 3000s for AMZN. Even the forward PE is still in the 100s, and that's assuming 'everything goes as expected' in 2013

see Key stats @ Yahoo! finance

In terms of stock price. If the market decides earnings are just 'not good enough', a swift move to the 260s is an easy target. The marginally more interesting downward move would be to the lower section of the channel..somewhere in the 240/30s.

Considering the strength in the main equity indexes, it would seem VERY unlikely AMZN will be trading under the 230s - where the 200 day MA is also lurking.

Lets be clear, just about everyone - not least, including yours truly, uses AMZN. Its a great service after all, but their pricing model stinks.

They need to quit offering free delivery, and ramp those margins up 5-7% minimum, preferably 10-12%. Where are the profit motivated management when what is a decent company, desperately needs them?
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AMZN will be one to watch this week.

*Q4 earnings are announced at the close of Tuesday, Jan'29th.