It began last night with FB’s earnings release, which triggered a spike in both FB and AMZN stock after-hours: LINK. I have been very clear to the subscribers of my Short Seller’s Journal to avoid shorting AMZN ahead of its earnings release after the market today. I also advised them to take profits on any short positions or put positions last week. I have been on the record stating that I fully expect AMZN to report a blow-out quarter. The trick is to understand how and where they are using GAAP/non-GAAP to inflate the net income and “free cash flow” numbers they will report. AMZN continues to burn cash and will continue to burn cash. That’s the bottom line.
Point in case is this puff-piece from Bloomberg News this a.m. which describes how AMZN generates revenues – yet it fails to describe how AMZN turns those sales in real net income and real cash flow. FYI, AMZN states in the fine-print of its 10K/10Q filings that its reported “free cash flow” number is not a metric that conforms to Generally Accepted Accounting Principles – a fact that should not surprise anyone who does real research and analysis on AMZN.