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AMZN - Amazon.com going short?


shalab
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AMZN - amazon.com has a P/E of 66 and a price to cash flow in the same range. The stock has gone up significantly in expectation of outsized growth. The downside risk of a short position is if Amazon beats the analyst expectations, the stock can go up in the other direction by 20-30 points as all the shorts rush to cover.

 

 

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AMZN - amazon.com has a P/E of 66 and a price to cash flow in the same range. The stock has gone up significantly in expectation of outsized growth. The downside risk of a short position is if Amazon beats the analyst expectations, the stock can go up in the other direction by 20-30 points as all the shorts rush to cover.

 

I gather that most seasoned short sellers do not like to short stocks purely on the basis of valuation. They prefer to short companies that have a fundamental problem in their business. It's a slower way to lose money. ;D

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Even Tilson is starting to get it.

 

T2 Partners January Letter - Eating Some Humble Pie On Short Selling Mistakes

 

Stock selection

 

Over time we’ve been quite successful shorting fads, frauds, promotions, declining businesses, and bad balance sheets. Where we have had much less success, however, especially in recent months, is shorting good businesses that are growing rapidly, even when their valuations appear extreme. Such open-ended situations, regardless of valuation, are very dangerous, so going forward we will avoid them entirely unless we have a high degree of conviction about a specific, near-term catalyst.

 

Netflix

 

Since we first wrote to you in December about our Netflix short position, we have received quite a bit of new information including results from our survey, input from investors, and the company’s recent earnings release. We are still digesting this information, which has both bullish and bearish implications, and will write to you about our conclusions in the near future.

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