The Next Big Short
Submitted by David Stockman via Contra Corner blog,
If you have forgotten your Gulliver’s Travels, recall that Jonathan Swift described the people of Brobdingnag as being as tall as church steeples and having a ten foot stride. Everything else was in proportion - with rats the size of mastiffs and the latter the size of four elephants, while flies were “as big as a Dunstable lark” and wasps were the size of partridges.
Hence the word for this fictional land has come to mean colossal, enormous, gigantic, huge, immense or, as the urban dictionary puts it, “really f*cking big”.
That would also describe the $325 billion bubble which comprises Amazon’s market cap. It is at once brobdangnagian and preposterous - a trick on the casino signifying that the crowd has once again gone stark raving mad.
When you have arrived at a condition of extreme “irrational exuberance” there is probably no insult to ordinary valuation metrics that can shock. But for want of doubt consider that AMZN earned the grand sum of $79 million last quarter and $328 million for the LTM period ending in September.
That’s right. Its conventional PE multiple is 985X!
And, no, its not a biotech start-up in phase 3 FDA trials with a sure fire cancer cure set to be approved any day; its actually been around more than a quarter century, putting it in the oldest quartile of businesses in the US.
But according to the loony posse of sell-side apologists who cover the company——there are 15 buy recommendations—–Amazon is still furiously investing in “growth” after all of these years. So never mind the PE multiple; earnings are being temporarily sacrificed for growth.
Well, yes. On its approximate $100 billion in LTM sales Amazon did generate $32.6 billion of gross profit. But the great builder behind the curtain in Seattle choose to “reinvest” $5 billion in sales and marketing, $14 billion in general and administrative expense and $11.6 billion in R&D.
So there wasn’t much left for the bottom line, and not surprisingly. Amazon’s huge R&D expense alone was actually nearly three times higher than that of pharmaceutical giant Bristol-Myers Squibb. But apparently that’s why Bezos boldly bags the big valuation multiples.
Not so fast, we think. Is there any evidence that all this madcap “investment” in the upper lines of the P&L for all these years is showing signs of momentum in cash generation? After all, sooner or later valuation has to be about free cash flow, even if you set aside GAAP accounting income.
In fact, AMZN generated $9.8 billion in operating cash flow during its most recent LTM period and spent $7.0 billion on CapEx and other investments. So its modest $2.8 billion of free cash flow implies a multiple of 117X.
Needless to say, the sell side chorus insists that one doesn’t matter, either. At the drop of a hat Bezos could purportedly hit the investment “pause” bottom and unleash a surge of free cash flow.
The cynic might say good luck on that, considering the record. But then again, he might also ask why was Bezos’ pause button massively rerated upward just as this bull market was reaching its fevered peak?
That is, we are just completing a year in which the Fabulous Four FANG stocks (Facebook, Amazon, Netflix and Google) gained $500 billion of market cap while the remaining 496 companies in the S&P index went down by more than one-half trillion dollars.
In that context, AMZN’s market cap one year ago was just $145 billion, meaning that it gained a stunning $180 billion or 125 percent during the interim.
By contrast, its free cash flow for the year ended September 2014 was $2.3 billion, meaning not only that it grew by a modest amount, but that a year ago the so-called “market” was valuing AMZN at just 62X free cash flow. And to complete the picture, during the year ended in December 2011 Amazon generated $2.0 billion of free cash flow, meaning that is was then being valued at just 40X.
Can you say bubble mania? Bezos is surely the greatest empire builder since Genghis Kahn, and has never wavered in his determination to spend every dime the company generates in sales. Profits be damned.
But history will surely record that the 48 months since December 2011 comprised the final stages of the most stupendous financial bubble in recorded history. During that period, the casino re-rated Amazon’s meager free cash flow from 40X to 62X to 117X on virtually no improvement in performance.
It was just plain old multiple inflation gone wild with respect to the last momo stocks standing.
We have been here before, and there is no better analogy than Cisco and its fellow shooting stars in early 2000 on the eve of the dotcom crash.
Indeed, Amazon’s $325 billion valuation is just plain irrational exuberance having one more fling. Spasms like this year $180 billion gain (125%) on the AMZN ticker or the $190 billion gain (55%) on the GOOG account are absolutely reminiscent of the final days before the tech wreck exactly 15 years ago.
In a recent post I demonstrated how the 12 Big Cap Techs of 2000—-led by Microsoft, Intel, Dell and Cisco——-saw their combined valuation soar from $900 billion to $3.8 trillion in the 48 months leading up to the March 2000 peak; and that they then plunged to just $875 billion a decade later.
To wit, their bubble era market cap got whacked by $3 trillion in the years ahead, even as their sales and earnings continued to grow. What got purged was irrational exuberance in a casino high on the central bank’s monetary heroin.
In this regard, Cisco was the poster child last time around for this kind of top-of-the-bubble disconnect. During the 48 month run to March 2000, its market cap had exploded from $40 billion to $506 billion or by nearly 13X.
By contrast, it net income had increased from $1.0 to $2.5 billion or by just 2.5X. Accordingly, its PE multiple was rerated during this classic era of irrational exuberance from 40X to 200X.
Even then, Cisco was not only the provider of all things for the internet, but was actually run by a CEO who had a decent respect for the idea of profits.
Indeed, during the most recent twelve months in the spring of 2000 CISCO had earned a respectable $2.5 billion of net income on $15 billion of sales. Moreover, this most recent net income posting had grown for eight straight years at a spectacular 50% compound rate from $100 million in 1992.
So its earnings track record was far more impressive and reliably rising than Amazon’s recent results. In fact, AMZN’s net income peaked at $1.15 billion way back in 2010 and has not come close to that high water mark since.
Still, Cisco’s problem at the turn of the century was the market’s lunatic valuation at 200X its smartly growing net income.
But here’s the thing. Cisco was already a mature technology company. There was no growth rate in the known universe that would have permitted it to earn into a $500 billion valuation.
Even at a standard 20X market multiple on its existing fulsome net margins (17%), it would have needed $25 billion of net income on $150 billion of sales to make valuation ends meet.
In fact, during the next 15 years Cisco’s performance steadily improved, but one and one-half decades later it is still at only one-third of the levels implied by its dotcom era market cap. That is, revenues have grown from $15 billion to nearly $50 billion, and its net income has more than tripled to nearly $10 billion per year.
Needless to say, it’s market cap today at $140 billion is just 25% of its dotcom bubble peak!
In short, its market cap was driven to the absurd height recorded in March 2000 by the final spasm of a bull market, when the punters jumped on the last momo trains out of the station.
CSCO Market Cap data by YCharts
At the end of the day, AMZN’s current preposterous $325 billion market cap has nothing to do with the business prospects of Amazon or the considerable entrepreneurial prowess of Jeff Bezos and his army of disrupters.
It is more in the nature of financial rigor mortis - the final spasm of the robo-traders and the fast money crowd chasing one of the greatest bubbles still standing in the casino.
And, yes, notwithstanding all the “good things it brings to life” daily, it is not the present day incarnation of even the mighty General Electric of the 1950s; and for one blindingly obvious reason. It has never made a profit beyond occasional quarterly chump change.
Not only has its net income been falling for five years, but what it has generated in the interim is actually a joke. To wit, during the last 23 quarters its has posted cumulative sales of nearly $380 billion but only $2 billion of net income and half of that was in 2010.
That’s right. The Kool Aid drinkers in the casino are betting $325 billion on a massive e-commerce distributor of books and merchandise that has a steady state profit rate at 0.5% of sales.
Admittedly, in these waning days of the third great central bank enabled bubble of this century, GAAP net income is a decidedly quaint concept. In the casino it’s all about beanstalks which grow to the sky and sell-side gobbledygook.
Here’s how one of Silicon Valley’s most unabashed circus barkers, Piper Jaffray’s Gene Munster, explains it:
Next Steps For AWS… SaaS Applications? We believe AWS has an opportunity to move up the cloud stack to applications and leverage its existing base of AWS IaaS/PaaS 1M + users.
AWS dipped its toes into the SaaS pool earlier this year when it expanded its offerings to include an email management program and we believe it will continue to extend its expertise to other offerings. We do not believe that this optionality is baked into investors’ outlook for AWS.
Got that?
Instead, better try this. As indicated above, AMZN’s operating free cash flow during its most recent LTM period was $2.76 billion compared to $2.26 billion way back in 2009.
So its six year free cash flow growth rate computes to just 3.35% per annum. And on that going nowhere track record, AMZN is being valued at, well, like we said, 117X free cash flow!
The fact is, Amazon is one of the greatest cash burning machines ever invented. Its net revenues of just $8.5 billion in 2005 have since grown by 12X to $101 billion for the LTM period ending in September, meaning that during the last ten and three-fourths years it has booked $455 billion in sales. But its cumulative operating free cash flow over that same period was just $6 billion or 1.3% of its turnover.
So, no, Amazon is not a profit-making enterprise in any meaningful sense of the word and its stock price measures nothing more than the raging speculative juices in the casino.
In an honest free market, real investors would never give a $325 billion valuation to a business that refuses to make a profit, never pays a dividend and is a one-percenter at best in the free cash flow department—–that is, in the very thing that capitalist enterprises are born to produce.
Indeed, the Wall Street brokers’ explanation for AMZN’s $325 billion of bottled air is actually proof positive that the casino has become unhinged. For more than two decades, Amazon has been promoted as the monster of the E-commerce midway, which it surely is.
But this year’s $180 billion roll of the dice has absolutely nothing to do with its capacity for same day delivery of healthy treats for your pooch. This most recent rip was all about the purportedly “scorching” performance of its AWS division——-that is, Amazon’s totally unrelated business as a vendor of cloud computing services.
Indeed, CNBC recently gave air time to one of the most rabid analyst on the block, and this particular stock peddler from UBS left nothing to the imagination. Never mind whether anything emanating from that serial swindler and confessed criminal organization can be taken seriously, here’s what the man said.
AWS is technology’s second coming and is worth $110 billion. We know that because AMZN has recently been thoughtful enough to break out its financials.
They show AWS had sales of $2.1 billion in the September quarter and revenues of $7 billion on an LTM basis. So that puts its cloud computing business’ value at 16X sales. No sweat!
Moreover, this means that the balance of the company—–that is, its core E-commerce business—– is “only” valued at an apparently much more reasonable $215 billion. And by golly, said the UBS man, that’s just 1.4X sales. So what’s not to like?
Well, hold it right there. Someone forgot to do the math in all the excitement about AWS. Yes, the company’s release did show that AWS posted $1.33 billion of operating income or about 20% of sales in the during the LTM period.
But consolidated operating income during the quarter was only $1.72 billion, meaning that by the lights of subtraction, Jeff Bezos’ great empire of E-commerce earned the microscopic sum of $390 million in operating income during its most recent year.
By the same magic of subtraction we can see that AMZN’s E-commerce business generated $94 billion of sales. This means that its operating margin was exactly 40 basis points.
That’s right—–after 25 years of crushing it on the E-commerce front, Amazon’s core business operating margin is truly a rounding error.
And might we also ask why you would value at $215 billion the profitless sales of an E-commerce monster that just can’t stop spending every dime it takes-in on distribution centers, package handlers, hired delivery trucks and drone prototypes; and now, apparently, same hour delivery service by out-of-work actors and bank tellers who happen to own a Vespa!
Stated differently, AMZN’s $180 billion market cap gain in 2015 was not actually a re-rating; it was a bait-and-switch operation by the high-rollers in the casino.
Amazon is not the inventor and first-mover of E-commerce, after all. Instead, it’s now suddenly held to be the monster of the midway in the totally unrelated business of cloud computing services.
By the lights of the UBS man and Wall Street’s amen chorus, AWS is valued at 16X sales now. But it will surely crush any competitor in the stretch ahead, and thereby grow its way into that outsized valuation.
Except don’t tell Google, Microsoft, Oracle or several others about the beanstalk thing. Indeed, the current nattering about AWS was truly ridiculous. Why would anyone endowed with a modicum of sanity believe that these tech powerhouses are about to cede the cloud to Amazon merely because it comes first in the alphabet?
There is no other real reason for thinking so. Between them, the big three mentioned above have about $220 billion of cash and deep franchises in the world of computing and the internet.
Sure, when technology moved from owned boxes, corporate computer centers and software licenses to a rent-a-server model, Amazon got out of the gate first because it had no installed base of old technology to protect.
But there are no barriers to entry, no killer patents, no material brand equity, no irreproducible sales and service network etc. that will permit Amazon to ring-fence the cloud. So there will be viscous competition and prices will fall at a rate which will make Moore’s law look tepid.
Indeed, Larry Ellison has recently promised to cut prices by 90%, and he has rarely failed to follow through on exactly that kind of competitive rampage.
Likewise, it would appear that the cloud is destined to be the future home of Microsoft’s entire franchise. Surely it is probable that AMZN’s Seattle neighbor can make the transition from selling computer software to renting cloud services.
In short, AMZN has disclosed almost nothing about AWS’s detailed business model, its fixed and variable cost structure or the investment requirements of its rentable clouds and the rates of return on the massive amounts of capital employed.
Only the Wall Street boys, girls and robo-traders betting on red could come up with $110 billion valuation of a nascent business that is positioned in the cross-fire of the Big Tech battlefield.
So Amazon’s total $325 billion valuation is just plain irrational exuberance. It is also surely the short of a lifetime.
(28 votes)
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Most of the money in cloud computing is b2b. When business is slow, they start cutting costs. That means price wars and everybody loses.
No, B2B is a very small portion of cloud computing. The biggest is consumer entertainment.
Servers are upstream, end nodes are downstream, the bytes orignate at the nodes and travel from server to server until they reach their end node.
Servers are in the middle between users or origin and destination. Kinda like the server between the cook and the diner.
an end node can be a server as well if the user installs peer sharing ala torrents etc.
A "node" is NOT a server.
Servers are NOT in the middle, they the BEGINNING. In your example the inbetween is a SWITCH or a CORE ROUTER.
Shhhh... Dude be quiet, nobody wants to hear the truth in this fantasy land. just nod your head and smile at the Emperors New Coat...
Whatever Amazon think it's building, the world will change before they get there. There is too much human ingenuity and capital floating around to keep it bottled up. Every empire falls. Every technology and logistical network they develop — it's good for 18 months, maybe 2 years before others catch up.
We all benefit from it. And should be cheerleaders for money being pumped into a company that spends it all, instead of hoarding like Apple. Bezos is a real ball-buster. He's close to what Steve Jobs was, but smarter and more personable. He's got more money than God and he's putting it to good use.
The article is not directing criticism at the AMZN business or services as dellivered. The question relates to the market valuation of a Low Profit enterprise.
The comparisons to the MSFT and CSCO valuations in 2000 is appropriate. Both continued to improve sales and earnings while increasing customers and services. However valuations had become so distorted that shareholders still suffered. CSCO was particularly bad as the company used whatever cash flow was available to repurchase shares to maintain the value of executive options.
It may be an Old School method, but look at the increase in Book Value. If the company reports profits and pays no dividends then Book Value should increase. If not, where did that money go?
Even more irrational when you consider that 99.9% of the shit they sell is going to end up in a landfill.
Mark the whole social media centric tech sector to zero. They are entirely and utterly dependant on ad revenue which is likely to dissappear in a post-consumerism (debt-fuelled consumption) world. They manufacture nothing. They bring almost nothing technologically to the table. Even the ones that have 'earnings' severely exxagerate such by stashing their 'cash' in offshore tax havens, and 'earn' much of it by merely accepting ads for competitors' websites. Not to mention being heavy users of guest workers on fraudulently obtained guest worker visas by lying about the availability of US workers.
I like this guy.
https://www.linkedin.com/pulse/truly-big-shorts-john-m-cunningham?trk=pr...
Programmers love AWS's development tools. Amazon's competitors have a lot of catching up to do. Google could, in theory, be displaced in searches, right? But no company has anywhere near their capabilities. Could be the same with AWS. $500m profit on $2b sales sure looks great as subsidizing their boring sales revenues. How much can Amazon sell AWS for? Good question.
you must have missed the part about other, more experienced with more money and an infrastructure already in place, companies are in the market. ellison, the king of business software says he can drop the price 90% from where it is. plug those metrics into the amzn formula and see what you get.
bexos got super dooper(a rare double pun) wealthy from the amzn scam. mission accomplished. reality is catching up to him.
We just did a very detailed analysis and comparison of AWS and Azure for a specific high-availability secure workload that we need to deploy across many jurisdictions, public as well as private cloud, with a variety of native functions, specific fully-integrated application functions like CRM and accounting, extensive APIs and different technology stacks including every flavor of open source, and mobile deployment. Azure kicked their ass
You are aware that the open source community has largely replicated most of AWS's toolset, right? So anyone can buy a few thousand machines, set them up on racks, and offer an AWS-like service? Basically commoditized computing.
Honestly, in the US at least, that doesn't matter nearly as much as the brand name. I'm currently in the middle of $10M ERP software upgrade, and each and every component has went from the high-end IBM\Oracle technology to MS .net implementations, which so far, are buggy as fuck. Of course, a lot of this is due to free money driving M&A while the tech teams are unable to glue it all together in any coherent fashion.
"buggy as fuck" what a surprise ... not
Just went through the same thing. Dynamics AX by any chance? Buggy is an understatement.
AWS is fundamentally more capable than MS Azure and other cloud services, and are extending their lead while exploiting economies of scale. While tech dinosaurs Dell and EMC are mating, HP is splitting up, and IBM is issuing IoT press releases. CISCO is a good network plumbing company. The transition to cloud computing is just getting started.
All the trillions being created by Central Bankers has to go somewhere....
umm no, actally AWS has been shaken for a while now by MSFT:
http://www.informationweek.com/cloud/infrastructure-as-a-service/amazon-microsoft-star-in-gartner-cloud-magic-quadrant/d/d-id/1269267
I should have copyrighted the WS "beanstalk" metaphor.
Stockman is plagiarising my wild imagination's "jewels of thought".
(haha ! I'm suffering from the disease of irrational exuberance! Must be the New year)
I hereby copyright the Cerberus analogy to the three headed FIAT monster called FED/ECB/IMF/
"Thar she blows!"
Where is Captain Ahab?
I disagree, I believe AMZN will be the largest market cap company soon. Bezos realizes he will be surpassed in the future but will continue to make a run over the next 5-10 years.
I also expect Amazon to become the leader in selling internet sales taxation services to all of their cloud customers once online sales tax becomes mandated.
Dave Kranzler is another analyst who sees the insanity of Amazon's valuations.
http://investmentresearchdynamics.com/amazon-amzn-sheer-insanity/
Otherwise, count me as a satisfied customer. Amazon is ideal for people like me who hate shopping.
As a side note, Bezos might have gottten his business model from industrial suppliers. Companies like McMaster-Carr, MSC and Grainger have practically anything an industrial user might need.
Yes AMZN is a great source for purchases and I use it constantly ... but it is RETAIL and retail scrapes by on micro margins, so to support it's valuation you have to say AMZN is something else and if it is AWS it will suffer the eventual collapse. Serverss and the cloud? I saw a 4 TB disk drive at Best Buy yesterday for $89.
Who would you rather listen to when it comes to AMZN? David Stockman or Stanley Drunkenmiller? AMZN is not trading at the valuation that it is due to e-commerce. The same goes for MSFT and GOOG.
I you read no other linkage today, try this one.
A review of radiation reporting by Veterans Today
And a video from Ian Goddard with a huge compilation on LNT radiation model. Remember, even if LNT is not technically correct, it is still useful in setting a reasonable low standard for our protection.
http://nukeprofessional.blogspot.com/2016/01/although-bob-nichols-does-i...
Shorting AMZN has been one of the primary means of supporting the stock price. Since the day this capital extraction vehicle was loosed upon a horde of newbie investors, it has been one continuos stream of price manipulation via control of the float---which was less than 10M shares orginally...
Short it. The cabal behind the curtain loves it when you do.
That Amazon exists proves the SEC has been owned for nearly a quarter century.
Amazon is building a new campus down by Lake Union. I was down there visiting some of their corporate types. I tell ya' I got that feeling like I was back in HK 30 years ago - the electricity and money in the air. Like an electric current.
Far as they go they are the reining kings of ecommerce - and they are in fact.
But I could also sense that this is the top. They are a mature business and the unicorn stuff won't hold much longer.
In fact their Waterloo may be them taking on their own logistics for delivery - they are already daggers drawn with UPS and are exploring their own air freight fleet. They will fail in this and if they go that route that would be the time to short.
However, you will brass balls to short this one - it has defied reality for decades and may continue to for awhile longer.
The problem with shorting is that it inherently forces someone to buy the USD$ (the other side of the short), which may very well be even worse garbage than Amazon.
Refusing to play the game probably is the most prudent course of action, even if one does believe AMZN's valuation is much closer to $0 than its current quoted price.
I have been to their HQ too as well as msft's. They can bring their dogs to work at Amazon. It has that successful "vibe" but the people are not the same caliber as they have in Redmond. I guess they don't have to be since it is a much different type of business. Lots more "girls".
You go first David
Amazons valuation is certainly stretched. BUT...... they have pretty much ran mom and pop out of business and now they can dictate the price, and they are. I wouldnt be surprised to see them be at a 60x PE by mid year.... I would rather be holding AMZN then FB or Wallymart
Dictate price on what? Mops and tooth paste?
Ups should short them , then raiseprices 1-2% monthly
That is a 100billion dollar idea. An effing lock, and huge win for ups shareholders.
monkey, AMZN are no dummies and already thought about this
Amazon, Uber pose challenges to FedEx, UPS delivery monopolyhttp://www.marketwatch.com/story/amazon-uber-pose-threat-to-fedex-ups-de...
Amazon, in Threat to UPS, Tries Its Own Deliverieshttp://www.wsj.com/articles/SB10001424052702304788404579521522792859890
Could Netflix be the next Blockbuster? Once people have seen what they want to see they disconnect. I did. If Amazon Prime would improve their interface and add more content they could eat Netflix lunch. This would be like the way MSFT got rid of Netscape. Come up with something alnost as good and make it free - part of your package deal.
We have pretty much moved on from Netflix to Amazon
I don't, but some claim they mostly use Amazon to avoid sales tax. More and more states are changing their laws.
Shorting internet stocks is a risky strategy, from my experience. I havent traded AMZN in a long time for that reason. The stock's movements just appear to have a guiding hand to them.
Shorts beware. I hear Shkreli is about to make a bid for AMZN.
Hard to short something this big in a market that is no longer driven by logic or business sense. Short this at your own peril.
I actually bought puts expiring Jan 8 .. this friday in AMZN. I'm feeling pretty good about a sizable pullback next week. Got the 650 and paid $1.75 .. 2 contracts only.
I believe that the Federal Government forces all large players ( the Vanguards and big banks ) to hold large stakes in AMZN. Reason: Who is going to distribute band aids and ready-to-eat meals to the public in a national disaster - the US Army Quartermaster Corps? I have never owned AMZN - if it were a non-public company - how much would it be worth. Has made no money in 20 years. Has distribution centers with many mechanical components that wear out. Same goes with robots - they are cheaper than humans, but wear out. Would wager that some distribution centers have old technology in need of replacement.
Look. This is a business that does not make money. AMZN is sheltered and protected - gets the cheapest loan money on the planet - a monopoly that will not get broken up.
I am long VXX with a standing sell order of $44. I will wait. When the AMZN and the other 3 get hammered down, I will make my money and be cashed out. Then, I will repeat (and not double down).
I make $10bn in operating cash flows. While operating 67% of my business at less than 5% GM to revenue. And I'm 36x of operating net cash flows? Not too bad. The other 33% of my business has doubled in the past year and yields 25% margins. Guess where I'm pouring money into? The thing that pays 25%.
No barrier to entry on AMS? Bullshit. The data centers aren't spec properties built by Amazon. They're just leasing space from CRE developers. They're overbuilding the data centers now. So it's a variable cost structure that will only go down. It's not transparent, but you have to do your homework.
It's overvalued. But this analysis is why you don't use these metrics.
Cloud computing may be overbuilt right now. I am involved in some biggies that have been built recently and they are only partially occupied and they keep on building.
Why not FB or NFLX too? Long GOOG short the rest???
There is no alpha.
Because of its massive advertising budget and other ties to the company the media often seems to be in bed with Amazon. This means you seldom hear anything bad about the retail behemoth. While the people who love and support Amazon might claim Amazon and its CEO to be clever, cunning, and masters of the game, an argument can be make that an aura of evil hangs over much of what it has created.
Amazon is a job killer that abuses and exploits the brick and mortar stores that line streets throughout America. People should consider what kind of community and society they want in coming years before jumping on the Amazon bandwagon. In the article below titled, "Fifteen Things Amazon Won't Tell You" you will find several things you were not aware of. I tried to stop at ten but found it impossible.
http://brucewilds.blogspot.com/2015/08/fifteen-things-amazon-wont-tell-you.html
It's not so much the 'rating' that is at issue, but the margin recovery expectations being built into the valuation models. I think we've all been here before on Amazon with markets getting carried away in assuming the top line trajectory can be sustained when they take to foot off the investment accelerator and that they're not going to have to respond to competitive challenges. If you want to understand why the shares are priced where they are, you ought to check out some new kids on the block who specialise in growth/valuation analysis - a real eye-opener. www.growthrater.com
Amazon is the new WalMart, and the warehouse/store will be closing in 5 minutes due to plumbing problems in the distribution hubs.
Note: If Baltic Dry is crashing why is it that Amazon is not experiencing the same implosion at the same time? Are there backlogs at the distribution hubs? Does Baltic Dry have any influence on Amazon whatsoever?