I was active on twitter Friday trading Amazon. I had two round-trips between $445 and $450. I’m under water on my core short position but I effectively reduced my cost-basis from the profits I made trading on Friday. I also shorted some slightly out of the money calls on AMZN, which look like they’ll expire worthless, which means I get to keep the cash from shorting them.
Reader “JB” had this to say:
Hey Dave, thanks for your advice to short Amazon! This is fun! After the freak spike last Friday I shorted lots of AMZN, and now I’m having fun watching the robots keep trying and failing to bring the Amazon Spike back to life!
This comment is from a reader who was an accountant in Silicon Valley during the tech bubble years:
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.
In it’s latest quarter AMZN reported that its Q1 net income swung from a $108 million in Q1 2014 to a loss of $57 million in Q1 2015. Naturally Cramer was gushing over Amazon’s results. I’d bet my dog’s life he doesn’t even understand the numbers that were reported. A Cramer recommendation is nearly 100% guaranteed to lose money for the idiots who follow him.
There’s a funny scene in the 3rd episode of the new season of “Silicon Valley” in which one of the characters remarks that it’s the kiss of death for a tech company to generate profits and that the market will place more value on a company as it loses more money. How true this rings with AMZN.
I bet most people reading this were not even aware that Amazon has piled on $9 billion in debt over the last two years. AMZN burned 2/3’s of the cash last quarter from the $6 billion bond financing it did late in 2014.
Amazon is a Ponzi scheme that has been enabled by nearly twenty years of continuous Fed money printing and financial market bailouts. Although shorting AMZN requires the ability and willingness to actively manage your risk exposure, it will ultimately be a grand-slam home run trade. Click on the pic below to learn more: