Bad Asset Allocation: more tech.
Amazon is one of the few original dot-com companies that actually became a viable business. That being said, this stock is massively overvalued. Trading at 112X trailing earnings, this stock is priced like a small cap hyper-growth stock. The only problem is at this size, it can't grow like a hyper-growth stock, leaving it with a PEG of 7.While I do love Amazon (I buy pretty much all of my books there), this valuation cannot last. They have less than $1B earnings propping up a $100B market cap - absurd, and their forecast for Q4 earnings is -$200M to $250M.
Historically, shorts in this stock have been crused. I am still unsure when to put on my short, but am looking for a good entry point. I will let you know when I find one.
Disclosure: I am not presently short AMZN, but may initiate a position in the next 72 hours.
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