AMZN's story isn't a value story. It's a supply and demand story. Everyone knows that AMZN is technically overpriced, yet more and more people want a piece of it as it goes higher. In fact, the more big news like "AMZN shooting up $46 in one day", the more new people will jump in. As for where AMZN will go from here, I think there are at least 3 short term stimulating factors that will send AMZN's price higher into perhaps split adjusted $120 (or $360 as of today) by the end of Jan. These factors are,
1) "Shop-the-net" announcement.
2) 3-for-1 split, and
3) blow-out Q4 revenue.
Firstly, as we all know, historically every Amazon's new business related news release has always boosted its price for at least 10% on the day. This time the "Shop-the-net" announcement should do just as well, if not better. This news will be taken as the first true sign that Amazon is becoming a generic e-commerce giant, so called WalMart on the net. Analysts have started to predict that Amazon will make the announcement within the near future. My guess is that, as soon as we see some significant retreat from the current price level, we will see the new release.
Secondly, AMZN will split on Jan 4th. With today's closing, AMZN will become $90 a share. We will see more and more people jump into the stock at the price, which will quickly send it above $100 within hours. In addition, with added liquidation, we shall see more and more institutions participating into the game. At $100, a fund can grab 10,000 shares with a mere $1-mil.
Thirdly, we all know that AMZN's Q4 result will be a blow-out one. Currently all the analysts have revenue estimates at $170 ~ $190 mil range. Even though all the analysts know that AMZN will easily blow out the number, none of them has increased their estimates. As we all know, AMZN has been a Street darling for quite some time now. This time, the Street will help AMZN to post another strong qtrly results. Following that, we shall see a whole slew of upgrading which will power AMZN upward for another 10% gain.
In short, I see no chance that AMZN will slip below $250 ($83 split adjusted) before the end of Jan. In contrary, I think the chance that we see AMZN trading at $120 post-split by then is very real.
Good luck!
MB |
