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  • once_on once_on Jul 13, 2013 1:54 PM Flag

    I am inventing the AMZN Rule

    The AMZN Rule: The stock goes up the same % of the forward earnings reduction by analysts after a Q release.

    Price is up 12.4% since earnings on an 11.2% drop in analyst estimated CY14 earnings

    Day of Q1 Earnings:
    Price: $274
    CY14 EPS estimate: $3.58
    FWD P/E: 77

    Pre Q2 earnings:
    Price: $308
    CY14 EPS Estimate: $3.18
    FWD P/E: 97

    If P/E remained at astronomical 77, Price would be $244.86 (which was the low it hit post earnings).

    Why does AMZN deserve such massive multiple expansion since April? Groceries????? Paying billions for old video content? Apple losing e-Book trial??

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    • Very interesting, I'd noticed it but never linked a pattern together as you have. What I find scary about owning this stock at these levels is that a good case could be made that it was fairly (or even richly) valued at $207, not $307. It's a bit like NFLX, and there's a little too much voodoo in the valuation for me.

    • It's because of pseudo capitalism. Ben is the only game in town. He will join all the other crooks in afterlife for picking winners and losers - or shall I say, picking losers against winners and turning losers into winners. Jim Rogers left the country. He could not take it

    • "CY14 EPS Estimate: $3.18"

      Interesting: as their peak 4 qtr earnings record EVER is $2.52: So in 2014, it will be interesting to see if the company can actually top the record ever made. We already know, that the analysts originally forecasted AMZN to be growing earnings to $5 by now originally from that $2.52. number. Instead, the earnings went down, stock more than doubled, and the analysts continue to rasie AMZN price tartgets relentlessly while lowering near earnings. Every investment AMZN has made has been rewarded big time by the market. They certainly have gotten a pass by the market to bottom line numbers for a long long time. In fact , forever. In fact, where shorts were right into the last few years is that there was a down cycle in earnings not forecasted by the WS analysts. What wasn't expected was not only wouldn't it matter, but also blow the stock out parabolically which it's now in the priocess of doing. AMZN stock didn't just jump the "shark" the last two years in the face of declining earnings, it skyrocketed to the moon here. I would have to agree with some who mention it here, that a lot of that, if all, has to do with the Federal Reserve's monthly QE purchases that ,expecially, seem to keep AMZN stock driving higher and higher. As long as the Bernanke put is there, Bezos may come closer and closer to attaining the wealth of Bill Gates and Carlos Slim, without even getting to the stage of showing consistent corporate profits to the balance sheet. Profits don't seem to matter, just QE backing right now and for so long now.

744.86+0.43(+0.06%)Jul 22 4:00 PMEDT