Yes, Mildred, It's a Bubble (And a Big One)
The Market Ticker - Commentary on The Capital Markets
Logging in or registering will improve your experience here
Main Navigation
Sarah's Resources You Should See
Full-Text Search & Archives
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions. For investment, legal or other professional advice specific to your situation contact a licensed professional in your jurisdiction.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility; author(s) may have positions in securities or firms mentioned and have no duty to disclose same.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be sent unmodified to lawmakers via print or electronic means or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media, to republish full articles, or for any commercial use (which includes any site where advertising is displayed.)

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.

Considering sending spam? Read this first.

2015-01-29 17:23 by Karl Denninger
in Earnings , 185 references Ignore this thread
Yes, Mildred, It's a Bubble (And a Big One)

Amusing price action, really.

Amazon had earnings and their shares popped materially, now trading back to where they were around the beginning of December.  Between the day's change and after-hours the stock is up roughly 13%.

Here's the problem -- revenue was light due (largely) to FX.  There are plenty of people ignoring the FX, which is probably where the pop is coming from.  However -- net sales were really only up in North America.

The other problem is that free cash flow decreased against year-ago figures, and so did net income.

Further, first-quarter guidance is pretty awful.

How someone manages to sell you a stock for nearly $350/share when the company only manages to come up with $591 million in operating income on $29.3 billion in gross sales simply astounds.  I mean, really, a 2% operating margin merits a P/E of somewhere around 700 (assuming they manage break-even the other three quarters to come -- which is probably optimistic!)

No, that's not a bubble.

As for Google, watch the birdie.  You can't short a stock that refuses to decline into a no-bullshit revenue and earnings miss, but if there's a company out there that does advertising, including mobile, better than anyone else it's Google.

The bird is chirping in your ear folks; flush the damn wax out and pay attention lest you start crying about being "surprised" in another few months....