Changing Direction on Amazon
Amazon (AMZN) is the enigma of retail. It is all about sales. To measure this on a price-to-earnings basis is simply a joke. To measure this on margins or based on cash flow might even be worse. But quarter after quarter, it doesn't seem to matter. The stock often gets hit initially after hours, and then pops right back higher. I know that many folks will attribute it to a short squeeze, but the short interest here is really nothing of note. I believe since the first major reversal I can remember where AMZN did a dip from $118 to $100 then fully recovered the next day, almost everyone plays the same trade: Buy the big after-hours dip. It is almost a foregone conclusion that AMZN will rally if it sells off. I saw it on Twitter last night. A very good trader I know was making a sarcastic reference toward it, but he was 100% right. That is the trade everyone is playing. The story, the results, the margins, the guidance or anything else don't matter, really.
But I believe that this will end....279 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.