What if AMZN is NOT taking over the world?
- Yeh yeh… it’s understood that AMZN is taking over the world. It’s a consensus call if I’ve ever seen one.
- It’s so powerfully consensus (and potentially believable) that a 4Q rev deceleration is largely being brushed off – even with a backdrop of a 73% run vs a year ago.
- One thing we’ve been highlighting is that AMZN never accelerated share gain in a 4Q – that was the case this time around.
- The point people are missing near term (especially the tech analysts covering this) is the fact that this quarter marks the point where every retailer in the US (almost) has an extremely promotional e-comm strategy. When Sunglass Hut, Ollies, Claires and Party City are banking on e-comm in a given quarter, they’re going to be more promotional as ever, and I think it’s near impossible for AMZN to profitably gain share – until it can.
- But before then, we need a wave of consolidation for AMZN to accelerate growth – or we simply need the Retail environment to accelerate meaningfully. Growth is accelerating and we could be setting up for a 4.2% GDP number by 2Q per KM.
- But in that kind of climate, I’m more inclined to go long junk retail, who can see a better increase in earnings growth.
- All in, we need to see people doubt that the AMZN ‘$25, $50 or whatever in EPS’ story is in question before the stock has one of those ‘buy every share you can days’. But then we’ll likely see more multiple compression (on what earnings?) before it’s actually at a reasonable point of the bottoming process. ‘I’ll wait for a pullback. Oh wait, the story changed. I’ll wait for another pullback’. We’ve seen it before and will see it again.
Maybe I miss this like it’s ULTA at $150, or AMZN at $350! But in the spirit of risk management, I’m waiting for a better out-of-consensus near term risk management call.
