At the beginning of the Year (see here) I made a prediction that Amazon’s AWS rapid revenue growth was a result of the QE Unicorn VC Bubble and that the growth would decelerate very quickly as the bubble had popped and funding was drying up. Three months later, and unfortunately for Amazon, not only have the Unicorn fundamentals continued to degrade but Google has stolen Apple, Dropbox and Spotify. Additionally, Google has hired Diane Greene the former founder of VMWare to take their cloud business to the next level. A few days ago she announced plans to build 12 new data centers and will be ramping up the marketing efforts big time which have been lacking. I would expect price wars to ensue due to the commodity nature of the business. Also AMZN did not lower prices once in 2015 which was an aberration compared to the previous years which had seen draconian price cuts. Given all of the above the sell-side is woefully optimistic on the revenue projections at AWS and will later this year race to the bottom in lowering estimates. Additionally the multiple should contract in anticipation of the new capacity that google is adding much like hotel stocks have multiple compression when new supply is announced. Keep in mind the entire 100% move in the stock last year was due to multiple expansion from the AWS business being revealed to the investor community and it was likely at peak metrics.
The chart looks like its forming a weekly head and shoulders and since the beginning of March is making lower highs. My guess is we should retest the $480 level and eventually breakthrough. The above news makes me more inclined to think we roll over in this stock soon. The stock is woefully over owned by Momentum chasing hedge funds that will be in redemption mode. My advice to them is sell first and often. This stock has had a tremendous run but it is over. I see years of underperformance in the name as they continue to disappoint on AWS, general corporate profitability and slowing overall revenue growth.If you enjoy the content at iBankCoin, please follow us on Twitter
You’re very brave. Last time you dogged AMZN it was in the $300s.
This is a stupid post.
you both are idiots. AMZN is the S&P’s version of fools-gold.
The company barely turns a profit and has has had razor-thin slow-growing margins for as long as I can remember.
unproven AWS is has inflated this stock to insane “Bioech Phase II testing” levels whereby setting the stock up for ultimate carnage on any slip up.
Wanna buy into cloud computing buy ORCL
*should be short QQQ regardless tho.
You seem to forget that Blue nailed that call. AMZN dropped 10% immediately after Blue called for the drop and for precisely the reasons he laid out. I belive the post was “wheels coming off the bus” or so,ething to that effect. Check it out for yourself.
Bring it down to 450 so i can start buying with both hands. Go talk to any Fortune 500 CTO and they will tell you 2016 is about investment in the cloud. That has the potential to be huge. AWS is still best of breed. Azure is trying and GOOG wants in on the gravy train but they are all far behind.
Once the JnJs of the world start moving compute network and storage to the cloud, this is a 50B business.
Btw, Silicon Valley was throwing around the peak AWS mantra 4 years ago saying all the startups were in the cloud and no one else was left to buy. Yet they keep on growing. The enterprise train is the big one, and it’s starting!
Blue I agree the cloud business will be in trouble, but its bread and butter is accelerating. I can’t count how many people ask me about my Prime membership, with half ending up getting it themselves, I order everything on it besides fresh food. I understand the margins on the cloud are much more profitable but could the volumes of prime offset the multiple compression on the cloud side? Just thinking out loud.
Guys, remove your opinion from the market… Or the stock… Being right is less important than positioning yourself to manage risk and thus making money. The secondary trend line in AMZN broke. Now it ripped after an equal low to retest the prior left shoulder high. If it rolls over from the current rip you have a bear flag breakdown that could lead to H&S breakdown.
Of course it could reject and just be a bear trap. Or it could break the neckline and then be a bear trap. Nevertheless, being bearish doesn’t mean the company will vanish in 3 years. I think a pullback to the primary trend line would be healthy.
This post was forward to the Bezos, whereupon he promptly ordered the stock to go up another 9
keep these dangerous blokes out (10 mins)
I agree Hattery.
The law of large numbers and competiton suggest otherwise. Plus the charts says its over more than my opinion.
Belkin agrees, short tech
time to cut longs & back up the truck on the shorts?