Amazon: A Long-Term Loser On Current Business Model

Amazon (AMZN) should not be an attractive asset for long-term investment. Current shareholders and interested investors should consider action for near to medium term; a short sell or short squeeze would be most advantageous. Despite recent tablet releases, nothing new has changed with Amazon. The business model is not favorable for long term growth or viability. Amazon is overvalued and overpriced in the market. The main focus seems short sighted and bound to fail in the long term as Amazon attempts to take on tech firms with established ecosystems in their respective core functions. The more promising AWS segment seems to be a non-core focus, while Amazon will eventually lose out to fierce competition as its earnings dwindle or never transpire unless drastic changes are made.

Amazon’s Kindle line competes directly with Apple (AAPL), Google (GOOG) and Microsoft (MSFT) in the mobile computing industry. Amazon is also competing with Netflix (NFLX) in the online entertainment market. Amazon’s running at a premium while its margins fail to keep pace with these major firms. Amazon’s market cap is around $116 billion, Apple’s around $655 billion, Google’s $232 billion and Microsoft’s around $262 billion. In the third week of September, both Google and Apple’s market price are around $700 per share, Microsoft’s around $31, Netflix’s around $57 and Amazon’s around $260 per share. Amazon’s price is a whopping 314 times earnings, Apple and Microsoft are around 16 times earnings, Google’s around 21 times earnings and Netflix is around 31 times earnings. To continue reading, click here.