William, thanks for your take. My concern is this: amzn declined 15% on over triple average daily volume. Needless to say, HUGE on both counts. As a bellwether, amzn cannot help but portend something for the sector as a whole. Let's face it, what we debate every day the fund managers do too. They understand retail seasonality, buildout of infrastructure, and all that. Some buy the amzn story and some don't. For those that do (or did), amzn's Q2Q revenue growth simply didn't cut the mustard, imo. What today's action tells me is that a significant portion that DID buy the story ran for the hills. Sell amzn and then reevaluate the rest of the sector.
Clearly, the inets were a momo dream from late 97 to Apr 99. Whether you believed the story or not, most knew or figured out that a lot of money could be made by going with the flow, following the momentum. And most knew, whether fundamental bull or bear, that the piper would have to be paid eventually, that the bubble would burst, that the Street would eventually start expecting the same things from the inets it expects from all companies: namely earnings.
My fear now is that the two month pullback from mid April to mid June was not just a normal correction wringing out speculative excess, but rather the first in a series of pullbacks in a larger bear market for the sector - one in which valuations contract in order to eventually fall in line with other stocks, as measured by traditional metrics.
Given that scenario, amzn at $50, as you postulate, sounds perfectly plausible. |
