AMAZON dot CON: “Black Friday” In July

By way  of background, I was a former financial statement auditor for one of the top accounting firms in the Silicon Valley. I audited many of the high fliers that crashed and burned, took companies public and was at the printers the day the bubble really burst which ultimately tabled that  particular IPO. Then, was a CFO at a software company for a couple years during the really ugly times. My point is I’ve got a heavy tech background.  So, when I say Amazon’s financials are the most misleading and misunderstood I’ve ever seen and their stock will crash mightily, we sound like we’re on the same page.  – comment from a reader who has read my AMAZON dot CON report.

Amazon.com stock is in the midst of an epic parabolic short-squeeze. It’s vertical lift-off is
presumably in advance of its heavily self-promoted “Amazon Prime Day” on July 15. It’s
“exclusive” to Prime members and supposedly will have feature sales prices which are better than “Black Friday.”

“Black Friday” in July? Hmmm…this can only mean one thing: AMZN is desperate to
generate sales in the face of declining retail sales. With Prime membership sales, AMZN
gets to take in $99 cash upfront. This will stimulate sales because Prime members are
entitled to free two-day shipping. But as you know if you read my research report, on a
cost-accounting basis, AMZN loses money on Prime sales once Prime sales per member
reaches a certain level. This is because the cost of two-day shipping – part of AMZN’s
gargantuan cost of fulfillment – eventually exceeds the profits from selling items plus the $99 paid upfront.

With the caveat that the Fed seems to be intent on pushing the entire stock market higher without any regard to the actual underlying fundamentals, I believe that AMZN is a great short-sell opportunity right now, both for a short term swing trade or for longer term large capital gains.

AMZN

To be sure,  if the Fed does manage to move the market up from here, there’s no point in shorting anything.  Fed intervention has forced just about every short-sell oriented hedge fund out of business.  I’ve never seen a market in which almost everyone is standing on the same side of the boat.

Having said that, when the event hits the system that is beyond Fed’s ability to control, the stock Amazon dot Conmarket will crash.  Shorting stocks can yield extraordinary profits in a short period time.  This is especially true with stocks like AMZN where the trend in net income is inversely correlated with the direction of the stock price.  In fact, the day that second break-away gap (right side of the graph above), AMZN reported a large net loss for its first quarter.  Not only that , but its “non-GAAP” phony earnings declined 17% from last year’s phony “non-GAAP” earnings.

In short, this stock is a joke and it’s market cap is absurd.  I’ve updated my AMAZON dot CON report with a brief discussion of why its Prime membership program loses money and will likely always lose money.  Then I discuss trading strategies, including a detailed section on using puts and calls:   AMAZON dot CON

The above report is based on AMZN’s numbers through year-end 2014.  I will be updating the report in the next few weeks with AMZN’s latest numbers.  AMZN is reporting its Q2 on July 23.  Although the updated section will available to current and previous buyers of the report, I will adding some additional analysis based on information I have received which makes the fundamental condition of AMZN even worse than I thought.  I will also be raising the price of the report.

9 thoughts on “AMAZON dot CON: “Black Friday” In July

    1. Yes and that will affect AMZN too in a big way. Look for Walmart to start flexing its online muscle. AMZN is a Ponzi scheme that will crash and burn. Bezos has looted billions in shareholder money.

  1. It would be nice to see Walmart starting to”eat Amzons lunch”

    I ordered a bag of charcoal (free delivery) from AMZN a couple of days ago.

    Still no “delivery drone” to be seen in my backyard here in Sweden.

    1. “Still no “delivery drone” to be seen in my backyard here in Sweden.”

      Yea, Lars, I think that’s because Obombu bought up the entire drone market. They’re all on back order now, maybe just call Barry to hook you up with a same-day drone delivery. He’s got some explosive deals!

      Yours truly,
      Formerly Mayor McCheese

      1. Yes i will give Barry Obunzo a call.

        Maybee he can send his “chief of foreign affairs” John Kerry to me in Sweden.

        This guy also operates under another name.

        “A hairdo in search of a brain”

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