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Kindling Finally Micturated On - Amazon Grace Expires As Stock Plummets

Tyler Durden's picture


It appears the Derek Zoolander Center For Children Who Can't Read Kindle Good And Want To Learn To Go Long AMZN Stock good too (and must be at least this big), is just not gonna get built after all. And so America's brief infatuation with yet another fad draws to a close. All AAPL fans: keep an eye on this one. Don't worry though, both Amazon and Apple will pass the ECB's stress test with flying colors.

Here is some perspective on Amazon from Jim Cramer circa April 26, (courtesy of Benzinga):

Jim Cramer said on CNBC's Stop Trading, Listen to Cramer that (NASDAQ: AMZN) will go to $150.

He thinks that we had a little bit of shake up in this stock because people thought that Amazon (AMZN) did not give a good level of guidance.

Cramer added that Amazon (AMZN) is a prime online retailer and AMZN has perhaps been sandbagging investors with the guidance. He believes that Amazon (AMZN) is ready to go up now, and its story is not even similar to Google (NASDAQ: GOOG) which lost China.


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Thu, 07/22/2010 - 16:22 | 484281 NOTW777
NOTW777's picture

derek zoolander has a cough

Thu, 07/22/2010 - 16:24 | 484285 10044
10044's picture

shorters are awarded big time

Thu, 07/22/2010 - 16:24 | 484286 firstdivision
firstdivision's picture

The day APPL misses estimates, there will be blood in the streets.  APPL's P/E couldn't take such a thing.

Thu, 07/22/2010 - 16:30 | 484303 Scarecrow
Scarecrow's picture

AAPL has a 15x forward P/E. The historical average forward P/E is 14.7x. 

AMZN forward P/E is 31x. I don't see your logic here. 

Thu, 07/22/2010 - 16:45 | 484332 homersimpson
homersimpson's picture

PE numbers aside (and one can argue PE is basically a worthless number nowadays), I think he's referring to the fact that AAPL is an HFT darling and if AAPL goes south, SKYNET will take down everyone else as well.

Thu, 07/22/2010 - 17:35 | 484433 Scarecrow
Scarecrow's picture

Ok, well then I can understand that, but comparing AMZN (low margin 51x ttm P/E retailer) to AAPL (high margin 22x ttm P/E tech company) is a bit of a stretch. The numbers aren't there. I've hated AMZN for a long time and hope this stock finally dies. I just don't see why anyone would pay 51x ttm EPS or 31x ftm EPS for a Wal-Mart/eBay hybrid. 

Thu, 07/22/2010 - 21:00 | 484763 Fred Hayek
Fred Hayek's picture

So . . the economy is completely reliant on idiots like this:


Fri, 07/23/2010 - 00:59 | 484976 BobPaulson
BobPaulson's picture

Good link. I laughed until it hurt.

Fri, 07/23/2010 - 09:44 | 485166 firstdivision
firstdivision's picture

You are correct and I was incorrect.  I haven't looked at APPL P/E for awhile now.  The comparison is nothing to do with fundamentals.  Granted now that APPL has fabs, they have more value than AMZN by far. More of "just say'n".

Thu, 07/22/2010 - 19:09 | 484590 ZakuKommander
ZakuKommander's picture

True, but frankly it's not as if anyone should be surprised that Amazon's halo is fading.  When you're a typical American gadgeteer who must choose between the Kindle and the iPad, the latter captures the imagination, while the former is merely competent.  

Fri, 07/23/2010 - 09:48 | 485178 firstdivision
firstdivision's picture

That is apples vs oranges (like my comparison earlier).  A Kindle does what it is supposed to very well.  An iPad is a netbookwithout a keyboard, always has been targeted at netbooks.  I do not know when the iPad got converted to an eReader competitor.  If people are only using their iPad as an eReader, then they blew their money into the wind.  Kindles were created for e(books, magazines, and newspapers), not surfing the net and playing games. 

Thu, 07/22/2010 - 16:25 | 484287 HarryWanger
HarryWanger's picture

Apple's time will come as well. iPad is definitely in the fad category and major competition has emerged for iphone. Margins will be impacted on costs and competition. Once that happens, expect a chart similar to this one.

Thu, 07/22/2010 - 19:02 | 484605 ZakuKommander
ZakuKommander's picture

Thought so once, but not now.  I'm watching it catch on with friends who are non-techy, never cared much for computers, but carry it around religiously now.  And older people are finally finding something that computer-like but relatively transparent.  

Indeed, Apple's success is due in large part because its products are transparent, almost as easy to use as a garage door opener.   

And as to iPhone competition:


Fri, 07/23/2010 - 09:50 | 485182 firstdivision
Thu, 07/22/2010 - 16:25 | 484288 Let them all fail
Let them all fail's picture

well if they could only run a stress test on Amazon then everything would be OK!!

Thu, 07/22/2010 - 18:05 | 484502 Aductor
Aductor's picture

Obviously this is the new business plan for Moodys et al - providing 'stress tests'. Same, same but different.

Thu, 07/22/2010 - 16:26 | 484290 NOTW777
NOTW777's picture

maria will now interrupt AMZN coverage to pitch the plunge in gold

Thu, 07/22/2010 - 16:51 | 484352 NOTW777
NOTW777's picture

hilarious.  nasdaq drops from 5000 to 2000 but maria is worried about loss of momentum in gold.

Thu, 07/22/2010 - 16:26 | 484291 Cognitive Dissonance
Cognitive Dissonance's picture

"Derek Zoolander Center For Children Who Can't Read Kindle Good And Want To Learn To Go Long AMZN Stock"

I just placed this in my Office Word dictionary so I don't need to remember how to spell it as I steal it from Tyler. BTW, that chart's showing one hell of a drop. Ouch, that's gonna leave a mark.

Thu, 07/22/2010 - 16:34 | 484312 NOTW777
NOTW777's picture

a tyler classic - cant stop laughing

Thu, 07/22/2010 - 18:46 | 484580 FEDbuster
FEDbuster's picture

Waiting for the "Blue Steel" Kindle to take them to the next level.

Thu, 07/22/2010 - 20:47 | 484748 Testicular Cancer
Testicular Cancer's picture

Magnum Model

Thu, 07/22/2010 - 16:27 | 484292 RobD
RobD's picture

So I take it Amazon didn't do the revised eps shuffle like some of the others?

Thu, 07/22/2010 - 16:36 | 484319 Cognitive Dissonance
Cognitive Dissonance's picture

They didn't do it quickly enough......obviously.

Thu, 07/22/2010 - 16:27 | 484293 The Alarmist
The Alarmist's picture

Gee, I was only a year ahead of things when I shorted it at 112.

Thu, 07/22/2010 - 16:27 | 484296 Ragnarok
Ragnarok's picture

There was a moment last night, when she was sandwiched between the two Finnish dwarves and the Maori tribesmen, where I thought, "Wow, I could really spend the rest of my life with this woman".

Thu, 07/22/2010 - 17:58 | 484481 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

I just laughed milk out my nose (and I hadn't even had any milk)

Thu, 07/22/2010 - 16:28 | 484299 almost_have_a_name
almost_have_a_name's picture

This is what the public will see:

Amazon 2Q Profit Jumps 45 Percent: ABC News 


Thu, 07/22/2010 - 16:36 | 484321 PC Load Letter
PC Load Letter's picture

Classic TD, thanks for the laugh


Thu, 07/22/2010 - 16:39 | 484324 traderjoe
traderjoe's picture

Wow - what a drop. Perhaps now a slow burn until the stock becomes a busted growth stock/value play. 

Cramer liked Netflix too. Ouch. 

Thu, 07/22/2010 - 16:39 | 484325 plocequ1
plocequ1's picture

Can someone see what's going on with Microsoft? Theres quite a party going on.

Thu, 07/22/2010 - 16:40 | 484327 Jason T
Jason T's picture

Been short since Feb at 118 .. rode this pig to 151 for goodness sake.

Markets are dreadfully inefficient. Not covering yet..waiting for the real bloodbath in valuaitions to come.

Thu, 07/22/2010 - 16:41 | 484329 Leo Kolivakis
Leo Kolivakis's picture


Thu, 07/22/2010 - 16:58 | 484367 The Rock
The Rock's picture


Why would I short AMZN when the economy is recovering Leo?  ;-)

Thu, 07/22/2010 - 17:34 | 484429 economicmorphine
economicmorphine's picture

Uhhh, I think the chart was what some folks refer to as "supporting documentation."  Sure looks like a short on the chart, anyway.

Thu, 07/22/2010 - 17:47 | 484463 The Rock
The Rock's picture

Yes, but I thought shorting AMZN would be heresy to Leo.

Thu, 07/22/2010 - 18:00 | 484488 Leo Kolivakis
Leo Kolivakis's picture

In the stock market, there are always winners and losers. This pig has to come down to earth.

Thu, 07/22/2010 - 16:43 | 484333 Internet Tough Guy
Internet Tough Guy's picture

Harmless gasoline fight gone wrong?

Thu, 07/22/2010 - 16:45 | 484337 Misean
Misean's picture

I fell asleep in my chair reading the Stressless Test II:European Boogie Nights review...Wha Happ'n!?!?

Thu, 07/22/2010 - 16:51 | 484349 Pamela Anderson
Pamela Anderson's picture

Is it just me or Cramer ads. began showing left and right at ZH with the legends: "Profit with Cramer!" and "Follow the expert"?

Thu, 07/22/2010 - 17:06 | 484379 The Rock
The Rock's picture

It's not just you.  But you do know that ZH has nothing to do with the ads that are being placed by google right?

Btw, Cramer is the biggest POS DOUCHEBAG clown this world has ever seen.

Thu, 07/22/2010 - 17:35 | 484434 economicmorphine
economicmorphine's picture

That's not true.  You can specify which ads you don't want to run with Adwords.  It's easy.  That's how you keep your competition's ads off your site.

Thu, 07/22/2010 - 17:50 | 484467 The Rock
The Rock's picture

I just meant that ZH does not place the ads themselves.  Yes, you are correct that they can block it, but why would they even bother in this case?

Thu, 07/22/2010 - 17:04 | 484381 spyware-free
spyware-free's picture

Welcome to the wonderful world of ad bots. Brought to you by

It's amazing where your browser goes without most people knowing it.

Thu, 07/22/2010 - 18:41 | 484574 New_Meat
New_Meat's picture

Pam--when the ZH part of your avatar is in ascendence, then on one side, when the beard, the other side.

But don't worry "there is no correlation".

- Ned

"when the moon is in the seventh house, and Jupiter aligns with Mars"  neh

Thu, 07/22/2010 - 16:50 | 484350 Waterfallsparkles
Waterfallsparkles's picture

Amzn is a Widows and Orphans Stock.  That means that anyone that Trades that stock ends up making their Wife an Children Widows an Orphans.


Thu, 07/22/2010 - 17:00 | 484373 Mercury
Mercury's picture

This chart just reminded me of the chef on (old school) Sesame Street who, right after the just-perfect presentation of his baked goodies, would wipe out down the stairs:


Thu, 07/22/2010 - 17:01 | 484375 stoverny
stoverny's picture

Don't own a Kindle (and have never seen a real life person reading one), but I still think AMZN is a great company.  I buy a ton of stuff from them simply because their price, selection, convenience, and service are almost always better than B&M stores.

Thu, 07/22/2010 - 17:08 | 484386 ejmoosa
ejmoosa's picture

I've been using the pc version on the laptop, and enjoy more than I expected.


What is more impressive is that there is no shipping expense on any ebooks, and they are sellong more ebooks than real books.  That has to be a big positive on the bottom line.

Thu, 07/22/2010 - 17:37 | 484437 economicmorphine
economicmorphine's picture

What's even better is Project Gutenberg .  Thousands of ebooks, all free.

Thu, 07/22/2010 - 17:41 | 484446 -Michelle-
-Michelle-'s picture

Project Gutenberg is nice, but the top sell for the Kindle (at least for me) is the portability.  There are thousands of free ebooks on Amazon, also.

Thu, 07/22/2010 - 18:46 | 484579 New_Meat
New_Meat's picture

and Gutenberg, that I love, has files in ascii, who would'a thunk.  But the books are mostly ...gonezo... from the popular consumption.

- Ned

Thu, 07/22/2010 - 18:48 | 484581 anony
anony's picture

That story about selling more ebooks than realbooks was spun.

The real story is that more ebooks were downloaded than HARDBACK books were sold.

It does not account for the paperback books that amazon sells in the millions. 

That is what NPR revealed in its report. 

Thu, 07/22/2010 - 19:04 | 484610 -Michelle-
-Michelle-'s picture

The initial press release specifically compared ebooks and hardcovers.  I don't think there was much spin.

Amazon founder Jeff Bezos rocked the publishing world with a Kindle sales quote late yesterday. He explained: "[W]hile our hardcover sales continue to grow, the Kindle format has now overtaken the hardcover format. customers now purchase more Kindle books than hardcover books--astonishing when you consider that we've been selling hardcover books for 15 years, and Kindle books for 33 months.

Thu, 07/22/2010 - 17:11 | 484390 Mercury
Mercury's picture

I (still) buy a ton of CDs from AMZN, usually used via third party sellers.  If you want (to legally purchase anyway) CD quality digital music you still, except for a smattering of titles, have to actually buy a CD.

Thu, 07/22/2010 - 17:15 | 484400 -Michelle-
-Michelle-'s picture

I've got one and love it.  Each of the kids will probably get their own as we get further along in their homeschooling.  I know I would have been overjoyed to have one when I was in high school and lugging around a 50-pound backpack.


Thu, 07/22/2010 - 17:18 | 484404 43 Steelie
43 Steelie's picture

Despite all the hatred towards the device on the site, I own a kindle and am a big fan. 

I stare at a computer all day and the last thing I need is to stare at another LCD screen (iPad) as I read a book before going to bed. 

Kindle lets you do that (for a reasonable price) and is here to stay in some way shape or form. Free wi-fi with cheap and immediate deliveries of books is a good combo regardless.

With that being said, I'm not long AMZN and don't plan to be unless we see it down another 10-15% minimum. That P/E is still out of control (see NFLX as well)

Thu, 07/22/2010 - 21:29 | 484796 Artful Dodger
Artful Dodger's picture

Paper shouldn't have been invented; it's so hard on the eyes, especially at bed time!

Thu, 07/22/2010 - 17:06 | 484382 virgilcaine
virgilcaine's picture

That drop rules out  the Efficient Market Theory.. Stocks are always appropriately priced to earnings.  The Market always is right.. lol.

Thu, 07/22/2010 - 19:36 | 484665 J.T. Marlin
J.T. Marlin's picture

How does it rule out the EMH? The stock was priced appropriately at 3:59pm based on the information that was public.

New information was released, and we now have a new equilibrium price which is 13% lower.



Thu, 07/22/2010 - 17:07 | 484383 barthezz
barthezz's picture

what logic is this recommending amzn by cramer on the day it hits 151?!?!?!



Thu, 07/22/2010 - 17:13 | 484395 Monkey Craig
Monkey Craig's picture

is this more an income statement concern with amazon or a balance sheet concern?

Thu, 07/22/2010 - 17:13 | 484396 TJ00
TJ00's picture

Ironic that they just brought out the new Kindle DX with the improved contrast screen that is so much better than the last generation of ereaders, yes I bought one to replace my Sony Reader and am more than happy with it for reading everything from ZH via the 3G to technical papers while  the competition carries on with inferior technology or goes bust like Irex just did.

Thu, 07/22/2010 - 17:26 | 484419 Panafrican Funk...
Panafrican Funktron Robot's picture

I think Kneale must have been long AMZN, he just totally QQ'ed, again.

Thu, 07/22/2010 - 17:49 | 484466 Flying Tilapia
Flying Tilapia's picture

eReaders are the word processors (think: Smith Corona) of this decade -- they have a niche, but pale in utility compared to a general purpose computer (in today's world, tablets).  It's good to see that hype bubble finally burst.

Thu, 07/22/2010 - 18:59 | 484598 -Michelle-
-Michelle-'s picture

I don't know.  I love to read.  Before I had kids, I read a book a day.  Now it's more like one every week or so.  While I still purchase hard copies of some books, almost all of my book purchases are now ebooks.

I wouldn't want to read these books on my computer.  I like being able to grab my Kindle to take with me.  I was stuck doing another darn 1-hr glucose today and I was able to read part of one book, highlight some notes from the book, pull up a few other books to cross-reference some ideas, and download a sample of a book mentioned on the TV in the waiting room at the lab.

Could I do that on a laptop?  Sure.  But I don't want to drag around my full-sized laptop and don't feel like buying a notebook.  I like that the Kindle basically serves one purpose: reading.  Sure, I use the basic web browser now and again, but I wouldn't miss it if they pulled the feature.

I suppose I am part of a niche.  I don't care to have all of the apps and features of an iPad, I think a phone should be used to actually talk to people, and I don't think I've sent more than two texts in my life (one of which was a response to a "Happy Mother's Day" message with no signature and consisted of "who is this?").

I think the bigger mistake for Amazon would be to try to turn the Kindle into an iPad.  I think it would be better for them to focus on one thing and do it well.

Thu, 07/22/2010 - 21:29 | 484793 Artful Dodger
Artful Dodger's picture

<misplaced reply>

Thu, 07/22/2010 - 22:17 | 484845 williambanzai7
williambanzai7's picture

It just kills people to admit that Apple is a well run company. If it is not then what is?

Thu, 07/22/2010 - 23:25 | 484878 virgilcaine
virgilcaine's picture

A trend following system would have had you out at 120.. the rest is just noise. Amzn the kindle isn't the same as amzn the stock.. Stocks are strange critters as the critters who trade them.


You may love the kindle but doesn't mean its a time to buy the stock. Its had a nice run. Nothing is a straight line except in Gov employment prediction.


Weekly signals, amzn Buy march 23, 2009 @ 70

  sell June 27 2010 @ 120

Thu, 07/22/2010 - 23:37 | 484908 JacksWastedLife
JacksWastedLife's picture

Which means Wal-Mart and Target will fall ever worse. ^_^


Fri, 07/23/2010 - 01:02 | 484978 romario
romario's picture

Bought a kindle yesterday..


Intelligent people will go for that, too bad most of the people are kind of dumb and will buy that Ipad joke.

Fri, 07/23/2010 - 07:59 | 485065 Coder
Coder's picture

Irrespective of the stock price being overvalued, the e-Ink (from any vendor) is stunning. If you haven't seen it walk three steps into a Barnes and Noble and take a look at their nook. I don't have any of the devices but am leaning towards the larger Kindle so I can read technical PDFs.

The e-ink kills any computer screen. Its like some kind of miracle or something, you can't believe it when you see it.

We homeschool also Michelle :)

Fri, 07/23/2010 - 10:33 | 485247 -Michelle-
-Michelle-'s picture

Kudos! :)

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