It is my contention that AMZN is a growth stock deceleration party and everyone is invited. As a growth stock manager the key to winning is to avoid fading growth stocks. I have previously articulated why I think this stock is a short. Since then we have some new data to digest. Lets go over the points:
1) The CFO announced his retirement: a huge red flag for me and as a rule, when I was a PM, I would trim or sell on this news. No one leaves a gig like this unless you don’t want to be around to clean up the mess.
2) Overall retail sales have deteriorated.
3) BABA is now a comp with actual profits.
4) They received a $2 billion line of credit from a bank a few months ago. Cash flow issues around the corner?
5) GOOG lowered their cloud service pricing again a few weeks ago. AWS is an awful commodity business that many seem to think has value. Check out RAX chart. AWS growth requires lots of capex and cash.
6) Their Fire Phone is a flop and likely burned a lot of cash as well.
7) The chart is telling you that something is very wrong.
8) My wife just ordered a bunk bed for $299.00 with two day free shipping to Hawaii. How much does it cost to ship a bunk bed to Hawaii via an airplane? This is anecdotal but you get my point.
Bottom line: I think we see cash flow problems and losses continue here as Bezos is stubborn and thinks investors will continue to give him a pass for profitless growth. I am guessing Bezos has not been listening to the CFO and that is why the CFO is leaving.
I have purchased a very short term put as of today to express this view point. The stock market has not been as kind to fundamental misses these days. The company reports tomorrow night after the close. This is typically a very strong seasonal time for this stock so I could be completely wrong. Somehow I don’t think I will.Comments »