Amazon's bubble valuations come from one single belief.
The laws of investment have not applied to Amazon, for now.
We identify two triggers for the bubble bursting.
Amazon (AMZN) has failed at everything!
Well almost everything. It has succeeded at just one thing. It has sold everyone the impression that Jeff Bezos is a genius and the company should be valued straight from the dotcom bubble days. This single impression has actually allowed the present day Amazon to continue to exist. In other words, Amazon's very continued existence is dependent on the investment community's belief in a massive lie.
Lies can inspire and lies can change the course of history.
William Wallace: And if this is your army, why does it go?
Veteran: We didn't come here to fight for them!
Young Soldier: Home! The English are too many!
William Wallace: Sons of Scotland! I am William Wallace.
Young Soldier: William Wallace is seven feet tall!
William Wallace: Yes, I've heard. Kills men by the hundreds. And if HE were here, he'd consume the English with fireballs from his eyes, and bolts of lightning from his a***
Source: From the movie Braveheart
The market's impression of Jeff Bezos is equivalent to the legend of Sir William Wallace that the soldiers believed in. Allow me to explain,
A typical company faces critical decisions on a regular basis. They have to constantly decide in which markets to expand and which markets to cede to competition. They weigh their decisions on a trade-off scale of current versus future profitability. They weigh their decisions as every mistake can be costly.
Here is what their chart looks like.
nasdaq amazon stock, nasdaq amzn after hours, nasdaq amzn options
Source: http://docphy.com/technology/computers/software/amazon-will-bubble-burst.html
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