So today was beautiful because it reaffirmed two of my calls. Granted, one is still greatly in the negative, but it’s starting to break.
As anyone who reads this thing or talks to me for 5 seconds knows, I am very anti-Amazon stock. I shorted it back in the high $200s and I have been beaten to a bloody pulp on it but the higher it went, the less sense it made. It peaked at $696 (so far, it’s a peak) on December 28, 2015 and it is now, after hours, as low as $542 per share. Yes, they missed earnings, by a lot, but this company is headed for a major tailspin. The valuations were crazy and it is finally starting to crack.
This is just the start. All the people who support Amazon only have one response: It’s growth! Well, just like I always say, growth is great, but at what price? You can’t just pay whatever because it’s growing fast! You still need to figure out what it’s worth AFTER all the growth and work backwards from there, but the euphoria kicks in and people make it go up and up and up! Amazon will be below $200 a share in the near future. That’s my call. And I will exit my short at $150 per share.
And for the other extreme…Microsoft (MSFT). Two years ago, everyone thought I was STUPID for buying this blue-chip tech company. “It’s dead!” everyone said. If it was dead, why was its revenue and profit both increasing year after year after year by 8-11% consistently? It was almost like Bernie Madoff with how consistent it was with its profit. Even I wondered if it was all a farce because how could a company that EVERYONE told me was dead still consistently increase profit and revenue? One local tech “guru” even told me that he wouldn’t buy Microsoft if it cost him $50Billion and it had $100Billion in a bank account and he could shut it down. That’s how stupid investors are on both extremes. At that time, it was trading for $23 per share. I sold the shares this month for $55. Hmmm. Interesting.
Bottom line is…I am not done with Amazon yet. And there will be a price that I am a buyer of Amazon. Why? Because investing isn’t about the company, only. It’s MOSTLY about the fundamentals from a long term perspective.
Apple is one of the most fundamentally sound companies out there and a few years ago it went from $720 per share down to $350 or so when it couldn’t make iPhones as fast as they were selling them. Now it makes $50Billion in one year and it’s down 5-8%. How do you figure that?
Yes, fundamentals don’t matter in the short run, but they matter with a VENGEANCE in the long run. This is probably the start of something for Amazon and the entire market when it comes to valuations.
I’ve said this all before and I keep repeating it.