The pattern continues ... AMZN has run up like this prior to all of the last 6 earnings calls, 5 of those 6 times it has collapsed after. Only exception was last Q. But last Q was unique as it had just gone through a long drop and was sitting a multi-year support level. This time the stock is way above all support ($50 above 200dma)
They haven't earning $3B in their existence to date over 20 yrs.
That means a dump on Monday will follow back to 367
Hammer - the issue is that this creates a self-fulfilling prophecy, as this manipulation moving of the stock price higher makes the pundits talk about how great the company must be (No one would dare to be contrarian) getting retail in on the small float, which drives the stock even higher. This continues until the cartel decides the price is high enough to take a profit, and carpet gets pulled out and everyone else gets crushed.
Then those same pundits say how terrible the company is doing - even though nothing has changed fundamentally with the company. AMZN was the worst in the world in December, now they are the best? All they did in Q4 was drop earnings and cash flow Y/Y on massively decelerating revenue growth.
That is unreal ... # 7 after having never earned a penny with significant negative cash flow over the past 20 years.
They dump on the bagholders this Monday - that is always how it happens.
Wow - compare numbers and outlook when we were last at $380. This stock should be down at least 30% since then.
1-YR target is $388 on far flung analysis. Highest valuation of Price-to-Book in the S&P500 (18x), forward P/E is 692 on dramatically slowing growth - currently 15%, terrible bond rating, and they're burning cash flow at $2.2B per year.
Herd mentality, the ponzi continues
Basically there is no one that dares to short of sell this thing .. very light volume means any bids push this think like crazy - a new floor has been established.
This thing will reverse heavy over next few weeks and get back below $300. What a joke.
Interesting - after big guide-down last Q and reset, EPS estimates have been reduced by 3x and rev growth cut ... no penalty.
Too funny - stock is upgraded to a "buy" from neutral, as they lower their price target to $70 from $82. There's conviction for ya!
Fair enough valentine - and this is what makes a market. The question is, how much of that forward potential performance do you want to pay for now? - you need to risk adjust it ...
Here is how I do it - because they make no profits, you have to assume what their earnings potential is .. because YELP is entering into positive earnings, you can look at their incremental spending and margins to predict the potential for the entire business once they reach their potential. For CY14, incremental EBIT is 9.9%. Take away 35% tax, and you can assume a future YELP has about 6.5% net income potential once they are efficient.
Based on $538M of analyst consensus revenue for 2015, that would be $35M in earnings, or $0.45 per share based on todays share count. Apply a PEG of 1.5 on 43% consensus revenue growth (FWD P/E of 65 on 2015 potential EPS), and you get fair value of $29.
At 7:14am highest bid is 1% below Friday close - and there is a huge reason why YELP doesn't cross 60 heading into earnings - it isn't worth it. The company's fair value based on user/rev growth and margin potential is about $25-$30.
If it gets above $60, it is only on momentum hopes and bigger fool - not company value.