Why Now Is the Perfect Time to Short This Trillion-Dollar Company
We now have two trillion-dollar players in the U.S. market, with Amazon.com, Inc. (NASDAQ:AMZN) joining the likes of Apple Inc. (NASDAQ:AAPL) in this illustrious group of two.
With great market capitalization comes great responsibility, and in that regard, Amazon better be prepared to deliver, given the company’s valuation multiple which is has hovered around 10-times that of its compatriot for some time now (though Apple's price-earnigns valuation multiple has "ballooned" to just above 20, compared to Amazon’s 166.)
Valuation multiple alone shows the sheer growth and world-dominance-premium Amazon is able to demand from equity markets. It appears the world believes Amazon is only beginning to take over retail, and also believes the company’s ability to innovate in new sectors and drive long-term change in other aspects of everyday life for consumers will continue to take the stock higher over time.
Amazon is certainly a giant, however, growth investors ought to be getting concerned about how pricey this stock has gotten in recent years. Any company, no matter how great, is a short at some point due to its valuation.
Amazon is certainly a great company with a great management team that has continued to deliver incredible revenue growth over time.
Profitability, on the other hand, is something which has lagged a valuation multiple which is simply too great given the size and scope of Amazon currently.
In this case, a long-Apple, short-Amazon trade may make sense for long-term investors looking for value today.
Invest wisely, my friends.
