Is the contest still on?
In order for Internet stock prices to fall, Wall Street has to go bearish on them, and right now, they're bullish. Typically, a market correction needs an excuse. For example, Russian and Brazilian economy, and "fear of lower than expected earnings in technology sector" have been used as excuses. These are what I call Big Lies. Kosovo conflict and the "European economy" may be a basis for our next Big Lie.
A Big Lie is needed to mask the real problem, which is the lack of fundamentals in the over-valued Internet stocks which we are all too familiar with. I'm unimpressed with AMZN's pursuit of business outside its focus, which is auctioning. Not only that, AMZN's book prices are not competitive, which defeats the idea of shopping on the Internet. Its advantage in being able to find hard-to-find books will be diminished now that Barnes & Noble is attacking the Internet market with a backing of Bertelsmann AG and its war chest. How's AMZN going to find more cash if they keep losing money? Raise prices on books? More issuance of stocks?
Today's settlement with Wal-Mart may tempt people to compare AMZN with Wal-Mart as the next Internet SuperStore. Wal-Mart keeps its focus on retailing, and its prices are extremely competitive and always has been. Does Wal-Mart waste money on business outside its core focus, like in auctioning? Nope.
Here's my prediction:
Resolution or direction of the Kosovo Conflict will become clearer by end of this quarter, which is at end of June. Professional Investors who have entered the market in the March correction should have had a healthy profit by then. AMZN will have to release an end of quarter report in July, but it may pre-announce a warning in June. This may lead to investors "suddenly" losing faith in Internet stocks that will start a chain reaction. I'm predicting that AMZN will lead the Internet stock correction.
In order for Internet businesses to grow, they need more people with computers. The sub $500 PC won't flood the masses until around Christmas time, so until then, Internet stocks are vulnerable.
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