I was wrong about Amazon

I was dead wrong about Amazon when I talked about its P/E ratio a week ago. I said its P/E was 164, a very high ratio in any sense. But actually Amazon's P/E ratio is over 3000! Yes, over three thousands!!! I'm not aware of any company in the whole stock market history that has ever got this kind of ridiculously high P/E ratio. What does P/E ratio mean? In a simplified way, it means you will have to wait for over 3000 years in order to get all of your invested money back as an Amazon's investor, if you simply wait for Amazon to return your money with its earnings. In other words, you won't see your money back in your life time if you buy Amazon at this level. For me, I'm not only not going to buy AMZN, I would also think it has even become a more sure thing that AMZN will go down from here. Its price action was terrible in the past few days, especially following its earning report. Below is its 5 days price chart, a clear downtrend. Look at its price action on Jan 30 following its earning report on Jan 29 after closing. While Amazon missed its earning estimates, its profit margin was considered better than estimate. The herd of investors got very excited about this report and its share price was immediately shooting up after hours. As you can see, it jumped up almost 15 points at the opening on Jan 30, but what followed was really terrible for it. It had been struggling the whole day trying to hold up but after all it could not. At closing, it had given up most of its initial gain and closed only marginally higher than the day before. It is technically very precarious and often a very bearish sign for a stock. Amazon continued to slide down the next 2 days.

I truly believe that this is the beginning of a much large downtrend for Amazon and I won't be surprised to see a 20% or more decline for it in the next few months. Of course it won't be a straight line to go down and its bulls will try to fight back along the way. But they cannot stop the momentum and will go down with it. Short AMZN!